Regulators have delayed an increase in margin requirements by nine months to 1 September 2016 much to the relief of derivatives market participants.
The new rules are set to apply to OTC derivatives not subject through central clearing in line with reforms mandated from the G20 meeting in 2009.
Regulators have heard the industry’s voice though, recognising that the timeframe was too tight.
While firms have been working towards preparing for the rules, the changes to their infrastructure, technology, processes and documentation meant that 1 December 2015 would have come too soon.
The delay was granted by the Working Group on Margining Requirements, jointly run by Basel Committee, part of the Bank for International Settlements, and the International Organisation of Securities Commissions.
International Swaps and Derivatives Association (ISDA) chief executive Scott O’Malia welcomed the decision.
“The revised implementation date should give firms additional time to develop, implement and test new systems,” he said. “We are grateful that regulators have listened to concerns expressed by ISDA and other market participants on this issue. We urge the national regulators to publish the final rules as soon as possible, and we look forward to working closely with the regulators over the coming months.”
European and US authorities published proposed national rules in April and September 2014, respectively, however final national rules have not yet been published.
The proposals set a phased implementation schedule for initial margin, starting from December 1, 2015 for the largest derivatives users and extending through to December 2019.