Regulatory AlertsCPS 226 Margining and Risk Mitigation for Non-Centrally Cleared Derivatives
The Australian Prudential Regulation Authority issued Prudential Standard CPS 226 to require APRA-covered entities to exchange variation and initial margin for non-centrally cleared derivatives with covered counterparties. The standard mandates specific risk mitigation practices, including the use of zero thresholds for variation margin and the posting of initial margin on a gross basis to reduce financial loss risks. These requirements apply to authorized deposit-taking institutions, insurers, life companies, and registrable superannuation entity licensees commencing on 1 January 2023.
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