International bodies issue final report on transparency and responsiveness of initial margin in centrally cleared markets

The Basel Committee on Banking Standards, Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions has published a final report on transparency and responsiveness of initial margin in centrally cleared markets. The report sets out ten final policy proposals, with the aim of increasing the resilience of the centrally cleared market ecosystem in times of market stress. The proposals are also designed to improve market participants' understanding of centrally cleared initial margin calculations and potential future margin requirements. They cover aspects of central counterparty transparency, governance, and review of initial margin models, as well as clearing member transparency for clients and CCPs. The final policy proposals take into account feedback received from industry on the consultative report on the same topic published in January 2024. A note published alongside the report summarizes the feedback received from respondents on the proposals set out in the consultative report and the rationale for the changes made as a result of that feedback. The relevant standard setting bodies will now consider how best to implement the ten proposals. The report forms one element of a comprehensive approach to improving transparency, streamlining margin processes, increasing the predictability of margin requirements, and improving the liquidity preparedness of non-bank market participants for margin calls, jointly taken by the BCBS, CPMI, IOSCO, and the Financial Stability Board. It is intended to be read alongside the other related reports published on the same day, discussed in our separate blogs, Committee on Payments and Market Infrastructures and International Organization of Securities Commissions report on effective practices for streamlining variation margin in centrally cleared markets and Basel Committee on Banking Standards and International Organization of Securities Commissions report on streamlining variation margin processes and initial margin responsiveness of margin models in non-centrally cleared markets. On the same day, the BoE announced that it co-chaired with the Commodity Futures Trading Commission international work on increasing the transparency and evaluating the responsiveness of initial margin in centrally cleared markets, which resulted in publication of this report. The BoE and the CFTC support the report’s findings.

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