The BCBS and IOSCO Delay Phase 5&6 of the Uncleared Margin Requirements for Non-centrally Cleared Derivatives

The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) released a statement on the 3rd April to delay the implementation of phase 5 and 6 of the uncleared margin requirements (UMR) following the impact of COVID-19 on the global economy.

The BCBS and IOSCO recognise the impact that the crisis has had on in-scope firms in terms of displaced staff and a reduction in working output and have thus provided additional support to market participants.

The final two stages of UMR will each be delayed by 1-year, providing an additional buffer period for firms to prepare, test and align objectives in order to comply with the rules. Phase five in-scope firms with more than EUR 50 million in average aggregate notional amounts (AANA) of non-centrally cleared derivatives will need to ensure they align to the requirements by 1 September 2021. These firms now have an 18-month period in which to comply.

Phase 6 in-scope firms with more than EUR 8 billion in AANA of non-centrally cleared derivatives will now need to comply to the requirements by 1 September 2022.

IOSCO have also announced a revision to their Margin requirements for non-centrally cleared derivatives in which they have updated the document to reflect these changes on page 24, article 8.7 and 8.8. No other major changes have been made.

The BCBS and IOSCO will continue to monitor and manage the impact of COVID-19 on the global economy.

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