The International Swaps and Derivatives Association (ISDA), together with the Institute of International Finance (IIF) responded last year to the consultative paper on margin practices (the Response). Back then there were some issues that we acknowledged but could not develop further in the time available.
This paper provides some additional thoughts on these topics. In addition, we also address some discussions within industry over the last year.
In summary, we cover:
- Intraday variation margin (VM) collection practices: We consider the potential costs and benefits of CCPs paying out intraday margin, and note that there are pros and cons that need to be discussed with participants in each market.
- Measurement of procyclicality: To support comparability between models, measurement of procyclicality should be easy to implement and to understand.
- Governance considerations around anti-procyclicality (APC) tools: We flag the importance of governance of anti-procyclicality (APC) tools.
- Notice for margin rate increases: We consider whether CCPs can provide advance notice of margin rate changes, especially if the use VaR models.
- Forward-looking margin transparency: We propose simple scenarios as a basis for forward-looking margin simulators.
Documents (1) for Additional Thoughts on Margin Practices
Latest
Market Transformation – IQ May 2026
On the 250th anniversary of American independence, this year’s ISDA Annual General Meeting (AGM) was held in Boston, a city that played a prominent role in the American Revolution. In his opening remarks, ISDA chief executive Scott O’Malia drew a...
Updated OTC Derivatives Compliance Calendar
ISDA has updated its global calendar of compliance deadlines and regulatory dates for the over-the-counter (OTC) derivatives space.
Letter to EC and ESMA on Derivatives Framework
On March 27, ISDA sent a letter to the European Commission (EC) and the European Securities and Markets Authority (ESMA) to highlight several technical issues arising from the interaction between the delegated regulation (EU) 2025/1003 on identifying reference data to...
Response on Proposed Changes to Transaction Rules
On May 22, ISDA and the Global Foreign Exchange Division (GFXD) of the Global Financial Markets Association submitted a joint response to the Australian Securities and Investments Commission's (ASIC) consultation on proposed changes to the ASIC Derivative Transaction Rules (Reporting)...
