On 13 February 2024, the Bank for International Settlements’ Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) published a report ‘Streamlining variation margin in centrally cleared markets – examples of effective practices’.

In September 2022, the Basel Committee on Banking Supervision, CPMI and IOSCO published a final report on the review of margining practices. The final report presented analysis examining where and, if so, to what extent, margin calls were unexpectedly large in centrally cleared and non-centrally cleared derivatives and securities markets. It also covered both initial margin and variation margin (VM), as well as centrally and non-centrally cleared markets (including clearing member-client dynamics), margin practices transparency, predictability and volatility. Liquidity management preparedness of market participants to meet margin calls and the availability of each jurisdiction´s regulatory data was also reviewed.

This latest report sets out the findings of a follow-up workstream on streamlining VM processes in centrally cleared markets. It describes eight examples of effective practices identified by CPMI-IOSCO for central counterparties (CCPs) and their clearing members regarding VM processes and transparency. These examples of effective practices are intended to inform CCPs as they design their VM call and collection processes in line with the Principles of Financial Market Infrastructures (PFMI) and 2017 Resilience of CCPs: Further guidance to the PFMI by providing examples of processes or behaviours which illustrate how these standards and guidance may be met. The effective practices have been informed by the responses to three surveys issued by CPMI-IOSCO to CCPs, clearing members and end user clients.