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    BCBS, CPMI, and IOSCO to Survey Market Participants on Margin Calls

    May 05, 2021

    BCBS, CPMI, and IOSCO (the Committees) are inviting entities that participate in market infrastructures and securities markets through an intermediary as well as non-bank intermediaries to complete voluntary surveys on the use of margin calls. The surveys are part of an examination into liquidity shortfalls during the early stages of the COVID-19 pandemic. The Committees are also collecting data from central counterparties (CCPs) and bank intermediaries. The results of the surveys will feed into work program to improve the resilience of non-bank financial intermediaries. Responses on the survey are requested by May 17, 2021.

    As part of the work program to enhance the resilience of the non–bank financial intermediation (NBFI) sector, G20 agreed that FSB should coordinate with the Committees to look at issues around margin calls during the early stages of the COVID-19 pandemic. G20 has called for a review of margining practices in cleared and uncleared markets, including with regard to the preparedness of market participants for margin calls. To achieve this objective, the Committees have set up a Joint Working Group on Margin, which is co-chaired by BoE and the U.S. CFTC. The Joint Working Group is examining the following areas, taking into account both initial and variation margins:

    • Margin in cleared and uncleared markets during the March market turmoil, including clearing member-client dynamics (workstream 1)
    • Margin practice transparency, predictability, and volatility during the March market turmoil across various markets, jurisdictions, and margining models (workstream 2)
    • Liquidity management preparedness of market participants (especially non-banks) to meet margin calls and the actions taken to prepare (for example, ability of firms to use or transform high quality liquid assets) (workstream 3)

    To undertake such a data-driven analysis, workstream 2 of the Joint Working Group is undertaking an ad-hoc survey to better understand the impact of margin calls in uncleared markets and margin calls related to house and client clearing activities from the perspective of firms. Additionally, workstream 3 of the Joint Working Group is undertaking an ad-hoc survey to better understand whether various financial market participants were prepared to meet increased margin calls and the mechanisms through which they funded these calls. The data required is outlined in the data templates. Respondents are asked to participate on a best effort basis and, as appropriate, to include any additional information or accompanying documents that describe aspects of their firm’s liquidity strategy, liquidity risk management practices, and constraints faced during the time-period under investigation. Individual responses will remain confidential and will be used only in anonymized and/or aggregated format in future publications. Respondents may respond to all or part of the questions. The Committees will be holding an information session on May 06, 2021 to provide additional context to the surveys and respond to questions of market participants.


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    Keywords: International, Banking, Securities, COVID-19, NBFI, G20, Systemic Risk, Survey, Initial Margin, Variation Margin, FSB, BCBS, CPMI, IOSCO

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