CP22/13: Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251 

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This joint consultation sets out the PRA’s and FCA’s proposals to amend certain onshored Technical Standards. These relate to margin requirements for non-centrally cleared derivatives.


Why we are consulting 

Our proposals aim to address issues previously raised by industry, while maintaining strong margin requirements for non-centrally cleared derivatives. 

We are consulting on 3 proposals: 

  1. Expanding the list of eligible collateral when exchanging initial margin to include some third-country funds (including EEA UCITS) provided certain criteria are met. 
  2. Introducing a 6-month fall-back transitional provision in certain circumstances where the margin rules would otherwise apply to firms immediately to allow firms to establish margin arrangements. 
  3. Amending the definition of CCPs to correctly refer to their regulatory status.

Who this applies to  

The proposals will apply to:  

  • banks 
  • building societies 
  • PRA-designated investment firms in scope of the margin requirements under UK EMIR 

This consultation is relevant to all FCA solo-regulated entities and non-financial counterparties in scope of the margin requirements under UK EMIR (FCA firms). 

Background to this consultation 

Without action, temporary eligibility of EEA UCITS as collateral would expire on 31 December 2022. The PRA and FCA are also aware that the current Binding Technical Standards (BTS) do not provide a transition period for firms who, in certain circumstances, would require an immediate application of the margin requirements. 

The proposals in this consultation would result in changes to the UK version of Commission Delegated Regulation (EU) 2016/2251 of 4 October 2016, the regulatory technical standards for risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty (hereafter BTS 2016/2251). 

This BTS supplements Article 11(15) of Regulation (EU) No 648/2012 on over-the-counter (OTC) derivatives, central counterparties, and trade repositories (UK EMIR) (Appendix 1). 

Respond to this consultation 

We want to know what you think.  

Our consultation is open for 10 weeks, closing on Wednesday 12 October 2022.  

Next steps 

Having considered responses, the PRA and FCA will submit the updated BTS 2016/2251 to the Treasury for approval, in accordance with section 138R of FSMA. 

Assuming Treasury approves, the PRA and FCA will make and publish the amendments to the technical standards for the firms they respectively regulate.