COVID-19 Update: Amendments To The International Framework For Margin Requirements For Non-Centrally Cleared Derivatives
Final deadlines for the exchange of initial margin for non-centrally cleared derivatives to be delayed by one year


On 3 April 2020, the Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO) published amendments to its framework 'Margin Requirements for Non-Centrally Cleared Derivatives' (the Framework).  The Framework establishes minimum international standards for margin requirements for non-centrally cleared derivatives. 

EMIR introduced requirements for parties to OTC non-centrally cleared derivatives to transfer margin for the purposes of risk mitigation.  The margin requirements provide for the transfer of initial margin (an amount transferred at the outset of the transaction to cover potential losses) and variation margin (an amount to cover daily mark-to-market changes in value of a transaction since the previous margin call).

With the stated intention of ensuring a 'level playing field', the margin requirements under EMIR broadly adhere to the minimum standards set out in the Framework.

The recently published amendments to the Framework are:

  • the final implementation phase will take place on 1 September 2022 (instead of 1 September 2021), at which point covered entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than €8bn will be subject to the initial margin requirements.
  • as an intermediate step, from 1 September 2021 (instead of 1 September 2020) covered entities with an AANA of non-centrally cleared derivatives greater than €50bn will be subject to the initial margin requirements.

While it is anticipated that the necessary amendments will be made to EMIR to reflect the above adjustments to the implementation timeline for non-centrally cleared derivative margin requirements, confirmation has not yet been issued by the Commission or the European Supervisory Authorities.  

Contributed by Nessa Joyce

Key Contacts

Vincent Coyne Partner

Patricia Taylor Partner

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