Regulatory Alerts2023-02-01
Joint Standard 2 of 2020 Margin Requirements for Non-Centrally Cleared OTC Derivative Transactions
The Financial Sector Conduct Authority and Prudential Authority have issued Joint Standard 2 of 2020 to mandate margin requirements for non-centrally cleared over-the-counter derivative transactions. Providers must calculate and exchange initial and variation margin based on counterparty credit risk exposure, subject to phased implementation thresholds that scale from R30 trillion down to a permanent R100 billion limit. The standard applies to intra-group and cross-border transactions, excludes sovereigns and central banks, and requires robust risk management frameworks, legally enforceable netting agreements, and clear dispute resolution protocols.
Share