Standard-setters Examine Margin Practices of Market Participants

Market participants are invited to complete a survey as part of a review of margining practices in cleared and uncleared markets.

The BCBS (Basel Committee on Banking Supervision), CPMI (Committee on Payments and Market Infrastructures) and IOSCO (International Organization of Securities Commissions) are inviting clients and non-bank intermediaries to complete a survey on the use of margin calls.

The survey is part of an examination into liquidity shortfalls during the early stages of the Covid-19 pandemic in March and April 2020.

The results of the survey will feed into work being done by the FSB (Financial Stability Board) to enhance the resilience of the NBFI (non-bank financial intermediation) sector.

The FSB was tasked by the G20 to coordinate with the Committees to look at issues around margin calls during the early stages of the pandemic, including to carry out a data-driven analysis of cleared and uncleared margin in that period and make policy recommendations.

In particular, the G20 has called for a review of margining practices in cleared and uncleared markets, including with regards to the preparedness of market participants for margin calls.

To achieve this objective, IOSCO, CPMI and the BCBS have set up a Joint Working Group on Margin (JWGM), co-chaired by the Bank of England and the US CFTC.

The JWGM is inviting non-bank intermediaries and clients to complete a voluntary survey by 17 May 2021.

The survey covers

  • initial and variation margins in derivatives and securities markets
  • margin in cleared and uncleared markets during the March 2020 market turmoil, including clearing member-client dynamics
  • Margin practice transparency, predictability and volatility during the March market turmoil across various markets, jurisdictions and margining models
  • Liquidity management preparedness of market participants (especially non-banks) to meet margin calls

As part of the review, the Committees are also collecting information from CCPs, bank intermediaries, non-bank intermediaries and clients.

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