The Basel Committee on Banking Supervision, the Bank for International Settlements’ Committee on Payments and Market Infrastructures and the International Organization of Securities Commissions published the final report Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals and the accompanying cover note Consultation feedback and updated proposals.

This report is the culmination of work undertaken by BCBS, CPMI, and IOSCO, co-chaired by the Bank of England and the Commodity Futures Trading Commission. This report is part of a holistic work program bringing together the BCBS, CPMI, IOSCO, and the Financial Stability Board developed in response to the March 2020 market turmoil. Pursuant to the September 2022 report Review of margining practices, which identified six areas for further policy work, the ad hoc group developed, consulted on, and finalized 10 policy proposals aimed at increasing initial margin transparency and enhancing the evaluation of the margin responsiveness in centrally cleared markets.

This report was informed by a data-driven analysis of margin calls in March and April 2020 and supported by analysis of relevant market events, including the publication of a report on margin calls in the context of the spring 2022 commodity market volatility. In addition to its public consultation in 2024, BCBS, CPMI, and IOSCO held several outreach events with industry through the policy development process.

The final report was published alongside the CPMI and IOSCO report Streamlining variation margin in centrally cleared markets – examples of effective practices, as well as the BCBS and IOSCO report Streamlining variation margin processes and initial margin responsiveness of margin models in non-centrally cleared markets.

Highlighting the analytical efforts and industry consultations undertaken, the co-chairs Sasha Mills and Richard Haynes thanked the members of the ad hoc BCBS-CPMI-IOSCO margin group for their collaborative participation in finalizing the policy proposals.

Sasha Mills, Executive Director, Financial Market Infrastructure, Bank of England, said:

“The international work on centrally cleared initial margin is a powerful example of addressing financial stability risks through international coordination across authorities and committees. The Bank will continue to support this work as standard-setting bodies consider how best to implement the proposals.”

Richard Haynes, Deputy Director, Division of Clearing and Risk, at the U.S. CFTC, said:

“The BCBS-CPMI-IOSCO margin group, by focusing on detailed data from a broad set of global regions, was able to sift between market rumours and reality, and achieve a balanced and pragmatic set of policy conclusions for implementation.”

Source: CFTC