After coordinated lobbying by the industry, the Basel Committee and IOSCO grant a one-year postponement for implementing the “UMR” – the new initial margin requirement rules for non-centrally cleared derivatives. 

This is an updated version of an article first published on 31 March, when the postponement decision was not yet taken.

It is the deadline for completing the final implementation of the margin requirements for non-centrally cleared derivatives that are now being moved to 1 September 2022. That is one year later than by the previous schedule. Background and documents can be found through their press release.

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A short time earlier, 21 financial trade associations had joined hands to ask the Basel Committee and IOSCO for postponement – until there is clarity on the covid-19 situation, without setting a date for it.

A long list of clubs

The European Banking Federation (EBF), ISDA and AFME were but three of the organisations in the acronym-rich group behind the bid to have the initial margin phase-in postponed – under the challenges of covid-19 lockdowns across the world. 

In a letter sent to the Basel Committee on Banking Supervision, as well as to the International Organization of Securities Commissions (IOSCO), they asked for mercy until markets are back to normal conditions. (On a different issue, only days later, the Basel Committee’s top body decided to to delay the introduction of its Basel III regulation package.)

“[O]ur members do not believe it is possible or practicable to meet documentation and operational requirements for the regulatory initial margin (IM) compliance dates on September 1, 2020 (Phase 5) and September 1, 2021 (Phase 6),” they wrote. 

“We respectfully request that BCBS and IOSCO issue an immediate, public recommendation to global regulators to suspend the compliance dates for Phase 5 and 6, and that global regulators act swiftly to provide corresponding reassurance in their jurisdictions while they work to address necessary rule amendments or other means to effect this decision.”

The senders listed themselves as follows: 

The International Swaps and Derivatives Association (ISDA),
the Securities Industry and Financial Markets Association (SIFMA),
the Global Financial Markets Association (GFMA),
the Global Foreign Exchange Division (GFXD) of GFMA,
the Investment Adviser Association (IAA),
the Australian Financial Markets Association (AFMA),
the Alternative Investment Management Association (AIMA),
European Fund and Asset Management Association (EFAMA),
the Investment Company Institute (ICI),
the American Council of Life Insurers (ACLI),
the Institute of International Bankers (IIB),
Managed Funds Association (MFA),
the Asia Securities Industry and Financial Markets Association (ASIFMA),
the Association for Financial Markets in Europe (AFME),
SIFMA Asset Management Group (SIFMA AMG),
the International Capital Market Association (ICMA),
the Institute of International Finance (IIF),
Insurance Europe,
the European Banking Federation (EBF),
Commodity Markets Council Europe (CMCE) and
the U.S. Chamber’s Center for Capital Markets Competitiveness (CCMC)

(Photo: Who’s Denilo / Unsplash)