Basel Committee and IOSCO Announce Postponement of Phase 5 Initial Margin Implementation

July 24, 2019

In a press release, dated July 23, 2019, the Basel Committee on Banking Supervision (the “Basel Committee”) and the International Organization of Securities Commissions (“IOSCO”) announced a one-year extension of the final implementation deadline for the initial margin requirements for non-centrally cleared derivatives. Covered entities with an aggregate average notional amount (AANA) of non-centrally cleared derivatives greater than €8 billion will now be subject to these requirements beginning on September 1, 2021.

The Basel Committee and IOSCO also announced an additional implementation phase, effective September 1, 2020, by which covered entities with an AANA of non-centrally cleared derivatives greater than €50 billion will be subject to the initial margin requirements.

Global regulators, including those in the U.S., are expected to announce their formal endorsement of these changes in the very near future.

For a summary of the July 2019 changes to the implementation of initial margin requirements (as described by reference to the rules operative in the European Union), please click here. On the basis of this announcement, the implementation of the U.S. initial margin requirements going forward is expected to proceed as follows:

AANA Compliance Deadline
Phase 4 USD 750 billion September 1 2019
Phase 5
USD 50 billion September 1 2020
Phase 6
(“old” Phase 5)
USD 8 billion September 1 2021

Investment firms with an AANA of €50 billion or less (or USD 50 billion or less, as applicable) that are already in the process of preparing for compliance in September 2020 should reassess plans in view of this extension.