PS14/21 | CP6/21 - Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251

Policy Statement 14/21 | Consultation Paper 6/21

Published on 30 June 2021

PS14/21 - Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251

Overview

This Prudential Regulation Authority (PRA) and Financial Conduct Authority (FCA) Policy Statement (PS) provides feedback to responses to Consultation Paper (CP) 6/21 ‘Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251’ (page 2 of 2). It also contains the PRA’s and FCA’s final policy, in the form of amendments to BTS 2016/2251. 

This PS is relevant to PRA-authorised firms that are financial counterparties for the purposes of Article 2 of the European Market Infrastructure Regulation (EMIR). In addition, this PS is relevant to all FCA solo-regulated entities and non-financial counterparties in scope of the margin requirements under EMIR.

Summary of responses

The PRA and FCA received four responses to the CP. The responses were generally supportive of the proposals. One response requested a clarification to the text. This response also suggested a number of further amendments to the onshored Binding Technical Standards (BTS) that did not relate to the draft policy under consultation.   

Implementation

The requirements will be effective on publication of this PS, which includes the final technical standards instrument by the PRA and FCA. 

The policy set out in this PS has been designed in the context of the UK having left the European Union and the transition period having come to an end. Unless otherwise stated, any references to EU or EU-derived legislation refer to the version of that legislation which forms part of retained EU law.

Policy Statement 14/21

Appendix


Published on 9 March 2021

CP6/21 - Margin requirements for non-centrally cleared derivatives: Amendments to BTS 2016/2251

Overview

This Consultation Paper (CP) sets out the Prudential Regulation Authority’s (PRA) and Financial Conduct Authority’s (FCA) proposals to establish or extend exemptions for some products subject to bilateral margining requirements, and to align implementation phases and thresholds to the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) standards.

The proposals in this CP would result in changes to the UK version of Commission Delegated Regulation (EU) 2016/2251 of 4 October 2016 supplementing Regulation (EU) No 648/2012 of the European Parliament and of the Council on OTC derivatives, central counterparties and trade repositories with regard to regulatory technical standards for risk-mitigation techniques for OTC derivative contracts not cleared by a central counterparty (hereafter Binding Technical Standards (BTS) 2016/2251), the Technical Standards under Article 11(15) of the European Market Infrastructure Regulation (EMIR).

This CP is relevant to PRA-authorised firms that are financial counterparties for the purposes of Article 2 of EMIR. In addition, this CP is relevant to all FCA solo-regulated entities and non-financial counterparties in scope of the margin requirements under UK EMIR.

Implementation

The PRA and FCA are proposing to amend BTS 2016/2251 using the making and amendment powers under Article 11(15) of EMIR and under Section 138P of the Financial Services and Markets Act 2000 (FSMA). These proposed changes would be effective on publication of the final technical standards instrument, which is planned for Thursday 1 July 2021.

Responses and next steps

This consultation closes on Wednesday 19 May. The PRA and FCA invite feedback on the proposals set out in this consultation. PRA-regulated firms should address any comments or enquiries to: CP6_21@bankofengland.co.uk. FCA solo-regulated firms should address any comments or enquiries to cp21-07@fca.org.uk. Other respondents should submit responses to both authorities.

Consultation Paper 6/21

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