Margin requirements for uncleared derivatives
Margin requirements for uncleared derivatives

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Margin requirements for uncleared derivatives
  • Background to margin requirements
  • Is the uncleared derivatives market important?
  • What is margin?
  • Why are there margin requirements?
  • What are the different phases?
  • BCBS/IOSCO Margin requirements for non centrally cleared derivatives
  • What requirements are set out in EMIR for uncleared derivatives?
  • ISDA documents
  • Preparation for Phases 5 and 6
  • more

BREXIT: As of 31 January 2020, the UK is no longer an EU Member State, but has entered an implementation period during which it continues to be treated by the EU as a Member State for many purposes. As a third country, the UK can no longer participate in the EU’s political institutions, agencies, offices, bodies and governance structures (except to the limited extent agreed), but the UK must continue to adhere to its obligations under EU law (including EU treaties, legislation, principles and international agreements) and submit to the continuing jurisdiction of the Court of Justice of the European Union in accordance with the transitional arrangements in Part 4 of the Withdrawal Agreement. For further reading, see: Brexit—introduction to the Withdrawal Agreement. This has an impact on this Practice Note. For guidance, see Practice Note: Brexit—impact on finance transactions—Key issues for derivatives transactions and Brexit—impact on finance transactions—Derivatives and debt capital markets transactions—key SIs.

Background to margin requirements

Following the onset of the financial crisis in 2007, the G20 group of countries agreed that the largely unregulated over-the-counter (OTC) derivatives market presented a major risk to the stability of the financial markets generally. The G20 leaders made a statement in Pittsburg in September 2009, which included, at paragraph 13, that:

'all standardised OTC derivative contracts should be traded on exchanges or electronic trading platforms,