See here for an article on the Reuters website about a speech by Steven Maijoor (Chair of ESMA), where he indicated that regulators are considering delaying the rules on margin for uncleared trades, which are currently scheduled to begin coming into force at the end of the year.

The rules mandate margin on derivatives trades that are not cleared. As things stand they would start to come in at the end of the year for those over a 3 trillion euro threshold. The threshold is to gradually decrease to 8bn euro by  2019. It is worth noting that the calculation of this threshold is different to the “clearing” threshold under EMIR in several ways. For example the hedge exclusion usually does not apply.

There have also been problems with trades executed with a counterparty in some third countries, which would the mean the rules coming in straight away.

The primary reason for the possible delay is being given that those to which it applies simply won’t be ready in time. It remains to be seen whether the delay will be agreed to.

In terms of the impact on the commodities and energy industry, it could be several fold: Firstly, those who trade with relevant third countries will be impacted straight away, regardless of threshold. Secondly, some could be over the threshold at some stage. But more importantly, the remainder could be pressured by financial counterparties either to margin regardless of the threshold, or to clear the trade (if it can be cleared), because of the capital benefits to the counterparty.

As a result, there is yet another reason why capital costs of trade are likely to increase.