The Basel Committee on Banking Supervision (BCBS), Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO) published three reports recently containing recommendations on margining practices in centrally cleared and non-centrally cleared markets. The recommendations are based on discussion with market participants and financial market infrastructures (FMIs) and aim to drive greater stability, transparency and predictability of margin requirements. They include proposals that could prevent a recurrence of some of the unexpected increases in margin calls seen during the Covid market disruption and other more recent episodes of volatility, but also come with increased costs and operational burdens. This article evaluates key aspects of the reports that merit attention.
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