International Margin Standards for Non-centrally Cleared Derivatives

Abstract

Abstract The elemental regime on margins for derivatives not cleared through CCPs was added later on to the international regulatory agenda. The US was a pace-setter at the international level and a first-mover at the domestic level in promoting relatively precise, stringent and consistent margin requirements. The EU supported the US international standard-setting efforts, but adopted domestic regulation after international rules were set. There were no foot-draggers, even though several jurisdictions on the fringe were reluctant followers. Domestic regulators gathered in international standard-setting bodies facilitated the ironing out of differences amongst and within jurisdictions. Transgovernmental networks also fostered rule consistency, helping to manage the regime complexity resulting from several interlinked elemental regimes on derivatives. Margins were heavily contested by the financial industry, which mobilized to make them less precise and stringent. Private actors also urged regulators to consider this reform in conjunction with other post-crisis standards, notably, capital requirements.