Clifford Chance

BCBS/IOSCO announce Phase 5 Initial Margin split

31 July 2019

Global standard setters BCBS and IOSCO have announced that the fifth implementation phase for initial margin (IM) rules for uncleared OTC derivatives will now be split into two phases, with smaller buy-side firms granted an extra year to implement these requirements.

Under the revised international timeline, firms with an average aggregate notional amount (AANA) of uncleared derivatives of more than $50bn will need to comply with IM requirements from the existing Phase 5 implementation deadline of 1 September 2020. However, firms with an AANA of uncleared derivatives between $8bn and $50bn will have an extra year to implement IM requirements, until 1 September 2021.

This follows an earlier statement from March 2019, in which BCBS and IOSCO indicated that firms in scope of Phase 5 IM requirements may nevertheless be able to continue trading without new documentation in place, provided that the amount of IM they owe to an individual counterparty is below the $50 million IM transfer threshold.

This briefing provides an overview of this change to the international IM implementation timetable, considers what steps national policy makers and regulators may need to take to reflect this change and discusses the practical implications for firms.

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