EU could fast-track derivatives margin rules

Law firm Linklaters anticipates the rules could come into force by mid November if the EC accelerates implementation.

The European Union could fast-track the adoption of collateral rules for OTC derivatives, and even implement them as early as mid-November.

The European Commission (EC) has asked the EU Parliament to accelerate the process for implementing the margin rules for uncleared derivatives, according to a parliamentary draft.

The rules were initially set to come into force in September, but were pushed back to January 2017. However according to Linklaters, the law firm has heard that the EC want the rules in place as soon as possible.

“This accelerated process is motivated by the EU having missed the first phase-in date of 1 September and by a desire to increase market certainty,” said Deepak Sitlani, derivatives partner, Linklaters.

“Whilst this timetable could still be delayed, the written procedure could mean that the EU rules come into force as early as 17 November and so could go live as early as 17 December.”

If approved, the implementation date would be welcomed by the derivatives industry which feared the go-live date may clash with the onset of variation margin rules in March 2017.

However, Sitlani said dealers subject to the EU rules “will need to establish initial and variation margin arrangements before Christmas”.