The criticisms came from the European Securities Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority.
In a joint statement, the regulators acknowledged that the latest requirements posed significant operational challenges for smaller counterparties but reiterated that the initial six-month delay was allowed in order to address these issues.
The regulators confirmed that no further delays would be possible because of the lengthy process for adopting EU legislation.
It was also clarified that none of the regulators have the power to issue non-action letters such as the US Commodity Futures Trading Commission’s (CFTC), which allowed a seven-month grace period to finalise their compliance infrastructures for the new variation margin requirements.
“The timeline for implementation has been known in EU since 2015, and it is unfortunate that the financial industry has not managed to prepare for the implementation. Furthermore, a delay of nine months was already granted by Basel Committee on Banking Supervision and the International Organisation of Securities Commissions in 2015 on the basis of similar arguments from the industry,” the authorities explained.
“That delay was agreed with the clear expectation that the financial industry would be ready to prepare the implementation within two years.”