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Final Implementation of the Margin Requirements for Non-Centrally Cleared Derivatives Extended

On July 23, 2019, the Basel Committee on Banking Supervision and the International Organization of Securities Commissions ( announced that they have extended by one year the final implementation of the margin requirements for non-centrally cleared derivatives. With this extension, the final implementation phase will take place on 1 September 2021, at which point covered entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than €8 billion will be subject to the requirements. To facilitate this extension, the Basel Committee and IOSCO also will introduce an additional implementation phase whereby as of 1 September 2020 covered entities with an AANA of non-centrally cleared derivatives greater than €50 billion will be subject to the requirements.

This revised implementation deadlines are intended to support the smooth and orderly implementation of the margin requirements which is consistent and harmonised across their member jurisdictions and helps avoid market fragmentation that could otherwise ensue. The Basel Committee and IOSCO expect that covered entities will act diligently to comply with the requirements by this revised timeline and strongly encourage market participants to make all relevant arrangements on a timely basis.

This delay to the implementation date should not encourage market participants to slow down their preparation. Firms should establish whether they are in scope, and if so, they should action the steps necessary to meet the new September 2020 or 2021 deadline. This new paradigm, for a significant number of the 'in-scope' firms, will require for the first time the development of third party operational and control processes to manage collateral and data. This effort needs to start as soon as possible as there are many steps required in order to be compliance ready. Even with a one year delay, firms will encounter significant challenges in meeting the new deadline.

Our Margin Transit Utility has helped many firms with preparing for compliance readiness by connecting c in-scope entities to tri-party and third-party segregated account structures. To learn more, contact us: