Regulatory Alerts2019-04-08
Joint Standard on Margin Requirements for Non-Centrally Cleared OTC Derivatives
The Financial Sector Conduct Authority and the Prudential Authority have issued a draft joint standard mandating initial and variation margin exchange for non-centrally cleared over-the-counter derivative transactions between providers and counterparties. The phased requirements, aligned with international BCBS-IOSCO standards, apply progressively based on aggregate gross notional thresholds starting in September 2019, while permitting specific exemptions for sovereigns, central banks, and qualifying intra-group or cross-border transactions. Providers must implement robust risk management, collateral eligibility, and dispute resolution protocols to mitigate counterparty credit risk and systemic exposure.
Share