Regulators in Europe and Asia have delayed the implementation of margin requirements for non-centrally cleared derivatives into next year, even as regulators in the U.S., Canada and Japan remained committed to the September deadline set by international agreement.
The European Commission informed lawmakers in June that it expects to finalize the rules before the end of the year, and that firms covered by the first phase of the margin requirements will be required to comply "before the middle of next year." In August, the Australian Prudential Regulation Authority and the Monetary Authority of Singapore published notices to delay the commencement of margin requirements for uncleared derivatives. Final rules in both jurisdictions will be issued in the coming months to allow institutions to continue to prepare for implementation.
The delays prompted the Financial Stability Board, the international body established by the Group of 20 to monitor the global financial system, to issue a warning that these differences in implementation timetables need to be resolved urgently. The U.S., Japan and Canada are the only three countries that will meet an internationally agreed deadline of Sept. 1 for the rules to start phasing in, the FSB said on Aug. 26 in a progress report on derivatives reforms. And more than half of the 24 jurisdictions that the FSB reviewed are not on track to implement variation margin requirements by a second deadline of March 2017. The FSB said the delays raise concerns about the incentives to use central clearing and the potential for regulatory arbitrage, and said all jurisdictions "should urgently take steps to meet the internationally agreed schedule."