Regulatory Alerts2020-05-25
Added · Updated
Recommendation of the European Systemic Risk Board on liquidity risks arising from margin calls
The European Systemic Risk Board recommends that competent authorities ensure central counterparties and clearing members limit sudden, significant changes and cliff effects in margin calls and collateral requirements during periods of acute stress. It requires central counterparties to include the default of any two service providers in their liquidity stress scenarios and to avoid creating unnecessary liquidity constraints by collecting and paying out intraday variation margins on the same day where operationally possible. Competent authorities must report on the implementation of these measures by 30 November 2020, while ESMA is tasked with reviewing technical standards to include these stress provisions by 31 December 2021.