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    BCBS and IOSCO Extend Implementation of Final Phase of Margin Rules

    July 23, 2019

    BCBS and IOSCO agree to one-year extension of the final implementation phase of the margin requirements for non centrally cleared derivatives. With this extension, the final implementation phase will take place on September 01, 2021, at which point covered entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than EUR 8 billion will be subject to the requirements. To facilitate this extension, BCBS and IOSCO will introduce an additional implementation phase whereby, as of September 01, 2020, covered entities with an AANA of non-centrally cleared derivatives greater than EUR 50 billion will be subject to the requirements.

    In the final phase of implementation, initial margin requirements are scheduled to apply to a large number of entities for the first time. In March 2019, BCBS and IOSCO published a statement noting that the framework does not specify documentation, custodial, or operational requirements if a covered entity's bilateral initial margin amount does not exceed the framework's EUR 50 million initial margin threshold. BCBS and IOSCO have agreed to this extended timeline in the interest of supporting a smooth, orderly, harmonized and consistent implementation of the margin requirements across their member jurisdictions to help avoid market fragmentation that could otherwise ensue. BCBS and IOSCO expect that covered entities will act diligently to comply with the requirements by this revised timeline and strongly encourage market participants to make all relevant arrangements on a timely basis. BCBS and IOSCO have published a revised version of the margin requirements to reflect this limited revision to extend the implementation timeline by one year. The revised publication features no other substantive changes to the margin requirements framework.

     

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    Keywords: International, Banking, Securities, OTC Derivatives, Margin Requirements, AANA, Implementation Timeline, IOSCO, BCBS

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