Blog article
See all stories ยป

Report published on final framework by BCBS and IOSCO

The Basel Committee on Banking Supervision (BCBS) and the International
Organisation of Securities Commissions (IOSCO) have published a report
containing the final framework for margin requirements for non-centrally
cleared derivatives.  Under these globally agreed standards, all financial
firms and systemically important non-financial entities that engage in
non-centrally cleared derivatives will have to exchange initial and variation
margin commensurate with the counterparty risks arising from the transactions. 

The framework envisages a gradual phase-in period to provide market participants
with sufficient time to adjust to the requirements. The requirement to
collect and post initial margin on non-centrally cleared trades will be phased
in over a four year period, beginning in December 2015 with the largest, most
active and most systemically important derivatives market participants.

A monitoring group is to be established to evaluate the margin standards in 2014
and it will review:

  • the extent to which initial margin collateral is rehypothecated;
  • which entities are electing to have their initial margin collateral re-hypothecated,
  • which entities have been allowed to re-hypothecate the initial margin collateral that they collect;
  • how jurisdictions and market participants are implementing the above conditions and giving protection to assets re-hypothecated;
  • how re-hypothecation works in practice;
  • whether the above conditions have created level playing field issues; and
  • how reporting on re-hypothecation can be enhanced. 

The monitoring group is to formulate recommendations to the BCBS and IOSCO about whether to continue to permit re-hypothecation of collateral under these
conditions, permit re-hypothecation for only a subset of non-centrally cleared
derivative products, prohibit re-hypothecation altogether, or whether to
otherwise modify the conditions.

 Related Link:


Comments: (0)

Blog group founder

Member since




More from member

This post is from a series of posts in the group:

Financial Services Regulation

This network is for financial professionals interested in staying up to date on financial services regulation happening anywhere in the world. CFOs, bankers, fund managers, treasurers welcome.

See all

Now hiring