The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) have agreed to extend the deadline for completing the two final implementation phases of the margin requirements for non-centrally cleared derivatives by one year.
The deferral is in response to the worldwide market disruption brought on by the coronavirus pandemic.
In light of the current business pressures on in-scope entities, the decision has been made to provide additional operational capacity for firms to respond to the immediate impact of COVID-19 and facilitate covered entities to act diligently to comply with the requirements by the revised deadline, BCBS/IOSCO said in a statement.
The extension confirmation comes shortly after the International Swaps and Derivatives Association (ISDA) wrote to BCBS/IOSCO on behalf of its members and those of many of 21 other associations to request the implementation timeline of the Uncleared Margin Rules (UMR) to be reviewed.
Under the new timeline, the final implementation phase will take place on 1 September 2022. Under the revised deadlines, covered entities with an aggregate average notional amount of non-centrally cleared derivatives above €8 billion will be subject to the requirements on 1 September 2021.
“We greatly appreciate the decision by the BCBS/IOSCO to defer implementation of phases five and six of the initial margin requirements,” said Scott O’Malia, ISDA’s CEO.
“This will enable the hundreds of buy- and sell-side firms that would have come into scope to focus their resources on ensuring business continuity, managing risk and supporting their customers. We will now work with national authorities in order for the revised timetable to be applied in each jurisdiction as soon as possible.”
The delay was also welcomed by other industry participants including the European Fund and Asset Management Association, which said the extension will help the financial industry to focus on its clients in these unprecedented times.
