Tuesday, September 10, 2013
Author: David Schwartz J.D. CPA David Schwartz J.D. CPA
The actual impact of margin requirements is subject to various factors and uncertainties, including, among others, the ratio of cleared to non-centrally cleared derivatives and changes in market volatility over time. Moreover, a number of the framework’s design elements could have impacts that may change over time depending on changes in market structure and market conditions.
The BCBS and IOSCO will set up a monitoring group to evaluate these margin standards in 2014. The evaluation will focus on the relation and consistency of the margin standards with related regulatory initiatives such as changes to standardised approaches for trading book and counterparty credit risk capital, potential minimum haircuts on repurchase and reverse repurchase transactions, implementation of the LCR, and capital requirements on centrally cleared derivatives that may develop alongside these requirements between now and 2014.
The monitoring group will consider developments in the effort to establish a global framework for cross-border interactions across an array of regulatory initiatives including margin. These developments will be reviewed to ensure that the interactions between differing jurisdictions in the context of margin requirements are compatible with the goals of this framework.