July 23, 2019 / 10:01 AM / 4 months ago

Global regulators extend new derivatives rule to September 2021

LONDON, July 23 (Reuters) - Global regulators have delayed by a year to September 2021 the final phase of new rules that require market participants to set aside cash or margin to cover their derivatives transactions.

Derivatives played a core role in the global financial crisis a decade ago and new rules were agreed to require all market participants to back their trades with cash in case they turn sour.

The Basel Committee of global banking regulators, and its counterpart for securities markets, IOSCO, said in a joint statement on Tuesday that progress has been made in rolling out the new margin rules for derivatives that do not pass through a clearing house.

The final so-called “Phase 5” of the rollout was due in September 2020, but many market participants said they would not be ready.

“The Basel Committee and IOSCO have agreed to this extended timeline in the interest of supporting the smooth and orderly implementation of the margin requirements which is consistent and harmonised across their member jurisdictions and helps avoid market fragmentation that could otherwise ensue,” the statement said.

“The Basel Committee and IOSCO expect that covered entities will act diligently to comply with the requirements by this revised timeline and strongly encourage market participants to make all relevant arrangements on a timely basis.”

Reporting by Huw Jones, editing by Louise Heavens

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