Response to PRA and FCA on Margin Requirements

On October 18, ISDA, the Investment Association, the Alternative Investment Management Association and the American Council of Life Insurers responded to the Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) consultation on margin requirements for non-cleared derivatives. In the response, the associations welcome the proposal to extend the temporary exemption from UK margining requirements under BTS 2016/2251 for single-stock equity and index options from January 4, 2024 until January 4, 2026, allowing the PRA and FCA to gather the evidence necessary to create a permanent regime. The associations believe a permanent exemption of equity options from the margin regulatory technical standards is warranted.

The associations also welcome the proposal to rely on existing supervisory powers and the current supervisory framework for assessing initial margin (IM) models and risk management rather than introduce a formal pre-approval requirement. As the final phase-in period for regulatory IM occurred on September 1, 2022, most market participants that intend to use an IM model like the ISDA Standard Initial Margin Model (ISDA SIMM) are already doing so, and this use is subject to oversight under the supervisory framework. Major market participants have been using the ISDA SIMM to calculate regulatory IM since September 1, 2016, and the introduction of a pre-approval requirement at this stage could prove disruptive, creating uncertainty on the permission of UK entities and their counterparties to continue to exchange IM based on the ISDA SIMM.

Documents (1) for Response to PRA and FCA on Margin Requirements

SPS Matrix – SPS Naming Convention

This document sets out the naming convention for how the Settlement Price Sources (“SPSs”), as defined in the ISDA Digital Asset Derivatives Settlement Price Matrix (the “SPS Matrix”), should be named to increase consistency and understandability. ISDA formalized the SPS...

A Global Blueprint for Market Risk Reform

The global financial crisis of 2007-2009 exposed fundamental weaknesses in how banks measured and managed risk, and the repercussions were felt by economies all over the world. In response, policymakers sought to rebuild trust and resilience in the global financial...

SwapsInfo Q3 2025 and Year-to-September 30, 2025

Trading activity in interest rate derivatives (IRD) and credit derivatives increased in the third quarter of 2025 compared with the same period in 2024, reflecting shifting monetary policy expectations and broader market conditions. IRD traded notional rose by more than...