ISDA Response to FCA/PRA Consultation on Margin Requirements for Non-Centrally Cleared Derivatives

On October 3, 2022, ISDA, the Investment Company Institute (ICI), the Institutional Money Market Funds Association (IMMFA), the asset management group of the Securities Industry and Financial Markets Association (SIFMA AMG) and UK Finance responded jointly to the UK Prudential Regulatory Authority (PRA) and Financial Conduct Authority (FCA) consultation on margin requirements for non-centrally cleared derivatives.

In the response, the associations welcome the UK proposals to extend the list of eligible collateral to include qualifying non-UK funds. The associations also support introducing transitional provisions where counterparties become subject to margin requirements for the first time due to a change in status of a counterparty or change in netting status of a relevant jurisdiction. However, there are significant differences between counterparties coming into scope due to a change in counterparty status and an entire jurisdiction having to comply, so we urge the PRA/FCA to distinguish between these two scenarios. Depending on the period used for the average aggregate notional amount calculation period, the proposed transitional period of six months will not be sufficient if counterparties become subject to margin requirements for the first time as a result of a change in netting status of a relevant jurisdiction. In that scenario, counterparties will need about 18 months from the change in netting status of a jurisdiction to put in place arrangements for the exchange of initial margin.

Documents (1) for ISDA Response to FCA/PRA Consultation on Margin Requirements for Non-Centrally Cleared Derivatives

Digital Assets and Derivatives: Where Next?

Digital assets are moving into a phase of institutional integration into derivatives markets. Trading venues, custodial infrastructures and tokenization platforms now exist across both traditional financial markets and public blockchain networks. While this diversity has accelerated innovation and liquidity formation,...

Launch of US Treasury Repo Market Indicators

ISDA has launched the ISDA-Actrix US Treasury Repo Market Clearing Indicators in collaboration with Actrix. The indicators illustrate central clearing adoption in the US Treasury repo market. Sponsored cleared repo volumes are used as a proxy to monitor client participation...