Featured Product

    EC Amends Implementation Schedule for Collateral Exchange Requirements

    February 17, 2021

    EC published Regulation 2021/236, which amends the technical standards laid down in Regulation 2016/2251, with respect to the timing for application of certain risk management procedures for the exchange of collateral. The amended regulation addresses the one-year extension of the deadline for implementation of initial margin requirements for certain counterparties. Regulation 2021/236shall enter into force on the day following that of its publication in the Official Journal of the European Union.

    Regulation 2016/2251, which is being amended, provides for a phase-in of the initial margin requirements over a number of years based on the implementation schedule agreed by BCBS and IOSCO. BCBS and IOSCO recently amended their schedule for the implementation of requirements for the exchange of collateral. This amendment to the implementation schedule of BCBS and IOSCO should be reflected in the phase-in provided for in Regulation 2016/2251. In the interest of supporting a smooth and orderly implementation of margin requirements across members of BCBS and IOSCO and to avoid market fragmentation, the deadline for the implementation of the initial margin requirements has been extended by one year for counterparties with an aggregate average notional amount of non-centrally cleared derivatives between EUR 8 billion and EUR 50 billion. As part of the phase-in, counterparties with an aggregate average notional amount of non-centrally cleared derivatives above EUR 50 billion shall be subject to the initial margin requirements from September 01, 2021. Additionally, counterparties with an aggregate average notional amount of non-centrally cleared derivatives above EUR 8 billion shall be subject to the initial margin requirements from September 01, 2022.

    Regulation 2016/2251 provides for a deferred date of application of the bilateral margin requirements for non-centrally cleared over-the-counter (OTC) derivative contracts concluded between counterparties that are part of the same group and where one counterparty is established in a third country and the other counterparty is established in EU. UK became a third country on February 01, 2020. Counterparties cannot predict what the status of a counterparty established in UK might become or to what extent that counterparty would be able to continue providing certain services to the counterparties established in EU. To ensure a smooth functioning of the market and a level playing field between counterparties established in EU, counterparties should be able to replace counterparties established in UK with counterparties in a member state without being required to exchange collateral in respect of those novated contracts. In addition, counterparties should be given sufficient time to replace their counterparties established in UK. Thus, the date from which the requirement to exchange collateral may be triggered for the novation of those contracts has been deferred, as part of these amendments to Regulation 2016/2251.

     

    Related Links

    Effective Date: February 18, 2021

    Keywords: Europe, EU, Banking, Securities, Implementation Schedule, Initial Margin, OTC Derivatives, Regulation 2016/2251, Counterparty Risk, Market Risk, Basel, Regulation 2021/236, BCBS, IOSCO, EC

    Featured Experts
    Related Articles
    News

    EBA Launches Stress Tests for Banks, Issues Other Updates

    The European Banking Authority (EBA) launched the 2023 European Union (EU)-wide stress test, published annual reports on minimum requirement for own funds and eligible liabilities (MREL) and high earners with data as of December 2021.

    January 31, 2023 WebPage Regulatory News
    News

    EBA Proposes Standards for IRRBB Reporting Under Basel Framework

    The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.

    January 31, 2023 WebPage Regulatory News
    News

    FED Issues Further Details on Pilot Climate Scenario Analysis Exercise

    The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.

    January 17, 2023 WebPage Regulatory News
    News

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News
    News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News
    News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News
    News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News
    News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News
    News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News
    News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8700