FSC Adjusts Implementation Plan for Initial Margin Requirements
The Financial Services Commission of Korea (FSC) announced its adjusted schedule to implement the initial margin requirements for non-centrally cleared derivative transactions. The initial margin requirements for financial institutions with derivatives of KRW 70 trillion or more will be implemented from September 01, 2020 as scheduled, while the implementation for the requirements with derivatives of less than KRW 70 trillion will be delayed until September 01, 2021. FSC will also propose a bill on margin requirements for non-centrally cleared OTC derivative transactions as the relevant guidelines by FSS are due to expire in August 2020. The bill is expected to prescribe legal obligation of margin requirements and disciplinary measures against non-compliance with the aim to ensure the effectiveness of margin requirement rules.
One-year postponement of the implementation of initial margin requirements for smaller financial institutions until September 01, 2021 is expected to cover 19 financial companies (as of 2018). About 35 financial companies are expected to be subject to initial margin requirements from September 01, 2020. FSS will hold a briefing on implementation plans for initial margin requirements to help financial institutions to be better prepared for the new rules.
In the detailed framework announced in March 2015, BCBS and IOSCO set differential implementation schedules according to the amount of non-centrally cleared OTC derivatives to give institutions enough time to prepare for the new regime of margin requirements. On July 23, 2019, BCBS and IOSCO announced a postponement of the implementation of initial margin requirements for financial institutions with non-centrally cleared derivatives of less than EUR 50 billion. Korea had adopted the margin requirements for non-centrally cleared OTC derivatives in March 2017 in the form of administrative guidance executed by FSS. Since March 2017, the variation margin requirements are being applied to 76 financial institutions as of July 2019. The initial margin requirements were initially due to apply in September 2020, given the smaller amount of non-centrally derivative transactions of domestic financial institutions.
Related Link: Press Release (PDF)
Keywords: Asia Pacific, Korea, Banking, Securities, OTC Derivatives, Margin Requirements, Implementation Timeline, Initial Margin, IOSCO, BCBS, FSC
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Trevor Howes
IFRS 17 technical advisor; AXIS actuarial modeling system expert; extensive experience in life insurance and life reinsurance, with focus on modeling, valuation, and financial reporting
Previous Article
BoE Statement on Conventions for Referencing SONIA in New ContractsNext Article
Bundesbank Releases XBRL Taxonomy 2.9 for ReportingRelated Articles
BCBS Amends Guidelines on Sound Management of AML/CFT Risks
BCBS amended the guidelines on sound management of risks related to money laundering and financing of terrorism (ML/FT).
US Agencies Finalize Amendments to Swap Margin Rule
US Agencies (Farm Credit Administration, FDIC, FED, FHFA, and OCC) finalized changes to the swap margin rule to facilitate implementation of prudent risk management strategies at banks and other entities with significant swap activities.
PRA Letter Sets Expectations on Approach to Managing Climate Risks
PRA published a letter that builds on the expectations set out in the supervisory statement (SS3/19) on enhancing banks' and insurers' approaches to managing the financial risks from climate change.
EBA Guidelines on Treatment of Structural Foreign Exchange Under CRR
EBA finalized the guidelines on treatment of structural foreign-exchange (FX) positions under Article 352(2) of the Capital Requirements Regulation (CRR).
FSB Issues Statement on Impact of COVID-19 Crisis on Benchmark Reform
FSB published a statement on the impact of COVID-19 pandemic on global benchmark transition.
IAIS Publishes List of Internationally Active Insurance Groups
IAIS published the list of Internationally Active Insurance Groups (IAIGs) publicly disclosed by group-wide supervisors.
FED Temporarily Revises FR Y-9C With Respect to PPPLF and CARES Act
FED has temporarily revised the reporting form on consolidated financial statements for holding companies (FR Y-9C; OMB No. 7100-0128).
EC Launches Consultation on Review of Solvency II Directive
EC launched a consultation on the review of the key elements of Solvency II Directive, with the comment period ending on October 21, 2020.
ECB Consults on Supervisory Approach to Consolidation in Banking
ECB launched a consultation on the guide that sets out supervisory approach to consolidation projects in the banking sector.
IAIS on Package for 2020 Data Collection on ICS and Aggregation Method
IAIS published technical specifications, questionnaires, and templates for 2020 Insurance Capital Standard (ICS) and Aggregation Method data collections.
