In a raft of releases this week, ISDA published results of the margin survey and a practical guide to navigating derivatives trading on US and EU recognized trading venues.
A Practical Guide to Navigating Derivatives Trading on US/EU Recognized Trading Venues
The announcement in October 2017 that the European Commission (EC) and US Commodity
Futures Trading Commission (CFTC) had reached agreement on the mutual recognition of
derivatives trading venues marked a big step forward in achieving cross-border harmonization
between the European Union (EU) and US.
However, the agreement has spawned a number of important questions about the practical
implications of how cross-border trading will work. This guide attempts to answer those questions.
In particular, it analyzes the effect of mutual recognition on the order flow of trades executed
on these venues, highlighting benefits and pointing to areas where further alignment would be
welcome. The guide is also intended to help market participants navigate the numerous regulatory
requirements related to trading on recognized venues by providing answers to commonly asked
questions.
ISDA Margin Survey Full Year 2017
The ISDA Margin Survey considers the impact of regulatory and other changes on collateral
practices, and analyzes the amount and type of initial margin (IM) and variation margin (VM)
posted for non-cleared derivatives, and the IM posted for cleared transactions. The survey finds that the amount of IM collected by the 20 largest market participants (phase-one firms) for their non-cleared derivatives increased by nearly 22% to $130.6 billion at year-end 2017 compared to the first quarter of 2017.
Of this amount, $73.7 billion represented margin posted by counterparties currently in scope of the rules (an increase of 58%), and $56.9 billion comprised discretionary IM posted by counterparties not currently in scope (a decrease of 6%). The survey also finds that $194.1 billion in IM had been posted by all market participants to major central counterparties (CCPs) for their cleared interest rate derivatives (IRD) and credit default swap (CDS) transactions at the end of 2017.