Margin Requirements: Comparison of the United States, European Union and Hong Kong Margin Requirements for Non-Cleared Derivatives
In September 2013, the Basel Committee on Banking Supervision and the Board of the International Organization of Securities Commissions finalized an international framework for margin requirements for non-cleared derivatives. The goal of this framework was to create an international margin standard for non-cleared derivatives so that financial regulators around the world implementing margin requirements in their respective jurisdictions would, hopefully, be largely consistent with their peers in other jurisdictions.
Now in 2016, we have seen final margin regulations in the United States from its various bank regulators and the Commodity Futures Trading Commission, a proposal from the Hong Kong Monetary Authority and the final draft Regulatory Technical Standards from the European Supervisory Authorities under Regulation (EU) No. 648/2012.
As described in this Client Note, the various rules/proposal are largely consistent, but there are difference across jurisdictions which market participants will need to account for in their compliance policies, procedures and documentation.