On April 3, 2020, the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) (BCBS/IOSCO) announced a further one-year deferral of each of the remaining phases of global initial margin (IM) regulatory compliance for uncleared swaps, in response to COVID-19 (see Practice Note, Global Margin Compliance for Uncleared Swaps).

With this deferral, the final IM implementation deadline (Phase Six) will be September 1, 2022, at which point covered entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than €8 billion will be subject to the requirements. Covered entities with an AANA of non-centrally cleared derivatives greater than €50 billion will be subject to the requirements as of September 1, 2021 (Phase Five).

BCBS and IOSCO have published a revised version of the global margin requirements on their websites to reflect this revision. The revised publication features no other substantive changes to the margin requirements framework. The deferral is part of a set of additional measures issued by BCBS/IOSCO designed to alleviate the impact of COVID-19.

Regulators in the US had just begun implementing the prior round of BCBS/IOSCO IM phase-in delays (see Legal Update, BCBS and IOSCO Extend Final Global Margin Implementation Deadline for Non-Centrally Cleared Derivatives to September 1, 2021). The CFTC recently adopted the initial BCBS/IOSCO revised schedule (see Legal Update, CFTC Announces New Rule to Accommodate Revised Global Initial Margin (IM) Phase-In Timeline), and US prudential regulators had proposed but not yet adopted the same schedule (see Legal Update, FDIC Proposes Modifications to Swap Prudential Margin Rules to Accommodate Revised Global Initial Margin (IM) Phase-In Timeline, Remove Inter-Affiliate IM Requirement, and Exempt Swaps Amended for LIBOR Replacement). Non-US jurisdictions had yet to adopt the first revised schedule.

It is expected that most major jurisdictions will ultimately adopt the further revised BCBS/IOSCO global phase-in deferrals.

For details on US margin rules for uncleared swaps, see Practice Note, US Derivatives Regulation: Margin Collection and Exchange Requirements for Uncleared Swaps.