Article: Segregation of initial margin (IM) for non cleared derivatives, legal considerations04 January 2016 | James Cherry
As a result of the turbulences caused by the global financial crisis, regulators worldwide increasingly focus on derivatives markets. Given the enormous risks posed by the unregulated off-exchange (“over the counter” OTC) market, there is a growing recognition that greater transparency in exchange trading significantly contributes to the future stability of the international financial markets.
At their 2009 summit in Pittsburgh, the G20 member heads of state and government came to the agreement that, by the end of 2012, all standardised derivatives contracts will have to be traded through exchanges or electronic trading platforms. In addition, large parts of OTC trading will have to be settled on a collateralised basis and reported to central trade repositories.
Within the European Union, this objective has already been implemented through the European Market Infrastructure Regulation (EMIR). The 2nd draft Regulatory Technical Standards (RTS), which fall under one of the 3 pillars of EMIR, were published in June 2015. The regulations are due for go live 1st September 2016 for eligible covered entities.