Regulatory Alerts2020-06-02
Joint Standard on Margin Requirements for Non-Centrally Cleared OTC Derivative Transactions
The Financial Sector Conduct Authority and Prudential Authority of South Africa mandate initial and variation margin exchange for financial providers entering non-centrally cleared over-the-counter derivative transactions with counterparties. The standard applies to intra-group and cross-border agreements exceeding specified notional thresholds, while excluding sovereigns, central banks, and certain physically settled foreign exchange contracts. Providers must implement robust risk management, dispute resolution, and collateral eligibility procedures, ensuring alignment with the Basel Committee on Banking Supervision and International Organisation of Securities Commissions framework.
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