On 15 December 2022, the PRA and FCA co-published a Policy Statement ‘Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251’. In the Policy Statement the PRA/FCA provides feedback to responses to their earlier Consultation Paper and sets out their final policy in the form of amendments to Binding Technical Standards (BTS) 2016/2251.

In their earlier Consultation Paper the PRA/FCA proposed amendments to margin requirements for non-centrally cleared derivatives to address issues previously raised by industry. These were to:

  • Specify the treatment of third-country funds as eligible collateral, including EEA Undertakings for Collective Investment in Transferable Securities.
  • Provide a fall-back transition period to address practical issues where firms face immediate application of the bilateral margining requirements.
  • Update the criteria for a central counterparty to be excluded from the requirements.

The PRA/FCA have made some changes to the final BTS as consulted on but do no consider the changes to be significant. In response to the comments made during the consultation, the PRA/FCA have made a change to the transition period to extend the eligibility of EEA UCITS as collateral. The PRA/FCA have also made a change to increase the fall-back transition period for circumstances where firms come into scope of the margin requirements for the first time, and the rules would otherwise apply immediately.

The requirements become effective on publication of the Policy Statement, which is when the final technical standards instrument by the PRA and FCA comes into force.