On 15 January 2025, three international regulators – the Basel Committee on Banking Supervision (BCBS), the BIS Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) – published final reports on initial and variation margin in centrally cleared and non-centrally cleared markets.
Background
The reports address areas of further policy work identified in the 2022 BCBS-CPMI-IOSCO Review of margining practices as part of the policy responses coordinated by the Financial Stability Board (FSB) to the March 2020 “dash for cash” market turmoil. Together they are intended to be a comprehensive approach to improving transparency and improving the liquidity preparedness of non-bank market participants for margin calls. The FSB’s earlier final report on Liquidity Preparedness for Margin and Collateral Calls, published in December 2024, forms part of this work programme, and complements the BCBS, CPMI and IOSCO reports.
Final reports
The final reports are:
- BCBS, CPMI and IOSCO final report ‘Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals’. The final report sets out ten final policy proposals which aim to increase the resilience of the centrally cleared market ecosystem in times of market stress. They cover aspects of central counterparty (CCP) transparency, governance and review of initial margin models, as well as clearing member transparency for clients and CCPs.
- CPMI and IOSCO final report ‘Streamlining variation margin in centrally cleared markets – examples of effective practices’. The eight effective practices set out in the final report provide examples of how standards set out in the CPMI-IOSCO Principles for financial market infrastructures, as supplemented by the relevant guidance, can be met.
- BCBS and IOSCO final report ‘Streamlining variation margin processes and initial margin responsiveness of margin models in non-centrally cleared markets’. The final report sets out eight recommendations to firms to encourage the widespread implementation of good market practices. These practices streamline variation margin processes and increase the responsiveness of initial margin models.