Margin requirements in the global derivatives markets are the latest Covid-19 casualty, as regulators decide to push implementation of yet another post–financial crisis reform.
The Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO) announced they are delaying the deadline for adopting margin requirements for derivatives that aren’t centrally cleared.
Final implementation of these requirements, which were developed in response to the financial crisis, was due to be completed by Sept. 1, 2021.
The regulators are pushing that deadline to Sept. 1, 2022, citing “the significant challenges posed by Covid-19, including the displacement of staff and the need for firms to focus resources on managing risks associated with current market volatility.”
By the final deadline in 2022, firms with an aggregate average notional amount of non-centrally cleared derivatives of more than €8 billion will be subject to the requirements. In 2021, firms with more than €50 billion in exposure will be subject to the requirements.
The regulators said that the extension will provide firms with “additional operational capacity” to respond to the immediate effects of Covid-19, while also enabling them to “act diligently to comply with the requirements by the revised deadline.”