The European Commission (EC) has stated it will proceed as planned with phase five and six of the uncleared margin requirement for non-centrally cleared derivatives, despite industry participants urging the EC to defer compliance until markets stabilize or set new deadlines following the global impact of the COVID-19 pandemic.
Scott O’Malia from the International Swaps and Derivatives Association (ISDA) submitted a letter on behalf of 21 trade associations to the Basel Committee on Banking Supervision (BCBS), International Organisation of Securities Commissions (IOSCO), global regulators and public authorities in order to seek flexibility to the final phases of the UMR adoption. The letter dated 25th March 2020 requests support for market participants who are impacted by the pandemic. While market participants are robust enough and capable of withstanding the affects of the pandemic, business continuity was noted to be impacted by remote working, limited access to legal and operational documentation, communication difficulties with counterparties and members of staff being compromised by the illness and/or caring for impacted family members. The lack of physical signatures on documentation was noted as another possible disruptor to UMR compliance, where digital signatures are not permitted in all jurisdictions.
The European Commission has not yet stated any plans to change the September 2020 deadline. At present, in-scope firms will need to proceed as planned for their phase five UMR compliance.
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