International Bodies Consult on Margin Practices

An international consultation has been launched on the review of margining practices in the centrally and non-centrally cleared markets. The consultation is being run jointly by the Basel Committee for Banking Standards, the Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions. In March 2020, around the start of the COVID pandemic, large increases in margin occurred in the centrally and non-centrally cleared markets, furthering the so-called "dash for cash".

The consultation is considering a range of potential changes to the international framework, such as:

• increasing transparency in the centrally cleared market;
• enhancing liquidity preparedness of market participants as well as liquidity disclosures;
• identifying data gaps in regulatory reporting;
• streamlining variation margin processes in centrally and non-centrally cleared markets;
• further work on evaluating the responsiveness of centrally cleared initial margin models to market stresses with a focus on impacts and implications for CCP resources and the wider financial system; and
• evaluating the responsiveness of non-centrally cleared initial margin models to market stresses.

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