Global banking and securities regulators are consulting on proposed policies for shoring up the resilience of centrally cleared markets.
In a joint report, the regulatory standards setters — 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 a review of margin in centrally cleared markets, and set out 10 policy proposals for consultation.
The proposals were crafted in response to recent episodes of market turmoil, including the disruption caused by the onset of the pandemic in March 2020, when aggregate margin requirements spiked in both centrally and non-centrally cleared markets, and the elevated volatility in commodities markets that arose in early 2022 amid Russia’s invasion of Ukraine.
The report sets out proposals that cover disclosure requirements for central counterparties (CCPs), margin simulation tools, metrics for monitoring margin responsiveness, margin model governance, and clearing member transparency.
The regulators said the proposals are intended to “increase the resilience of the centrally cleared ecosystem by improving participants’ understanding of CCPs’ initial margin calculations and potential future margin requirements.”
The regulators are seeking feedback on the proposals by April 16.
They noted that the Financial Stability Board (FSB) is also developing high-level policy proposals on the readiness to meet margin and collateral calls by non-banks. It plans to publish its report in the first half of the year.