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News on the start of the uncleared margin rules

The start of the rules around the mandatory margining of bilateral derivatives which requires those caught to exchange initial and variation margin on bilateral derivatives, was initially set to start worldwide, for the largest banks, on 1st September 2016. However, the rules did not start in Europe and several other jurisdictions. This article on the DRS website discusses possible new start date of January 2017.

Following this date, the requirement to exchange variation margin will commence over the weeks following, for those caught (financial counterparties and non financial counterparties over the clearing threshold). The initial margin requirements will be phased in over the following years.

While many in energy and commodities are outside of the rules, since they are “NFC-“, some will become “FC” due to being required to set up a “regulated entity” under MiFID II due to the changes in the exemption rules of MiFID, requiring commodity traders to pass the Ancillary Activity test in order to remain outside of financial counterparty status.

About avivhandler

Aviv is the Managing Director of ETR Advisory, a niche consultancy focused on energy and commodity regulation. He has more than 20 years of experience in energy and commodity trading, credit, risk and financial technology. He has delivered a series of trading, credit and risk solutions to a wide variety of oil majors, power and gas companies and investment banks. Prior to founding ETR, he was Partner at SunGard Global Services, where he built a Centre of Excellence in European Energy Regulation. Before that, he founded Coherence, a consulting firm specializing in credit risk in commodity and energy trading as well as software product management. The credit practice ultimately became part of Sirius Solutions, where he was the Managing Director of Europe. He has also held management roles at KWI and Iris Financial, among other organizations. Mr. Handler holds a degree in computer science from Imperial College, University of London.

Discussion

One thought on “News on the start of the uncleared margin rules

  1. DRS sent out an email following that blog post retracting their ideas, the regulations clearly say March 1st is the earliest they may start.

    Posted by Bill Hodgson | October 3, 2016, 9:21 am

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