On 28 June 2022, the UK’s Prudential Regulation Authority (PRA) published a letter to the Chief Risk Officers of banks operating under its jurisdiction. The letter details its review of the market’s use of ISDA’s Standard Initial Margin Model (SIMM); the review was intended to assess the SIMM’s performance during recent periods of market stress […]

The PRA and FCA yesterday published a joint policy statement on margin requirements for non-centrally cleared derivatives, making amendments to Binding Technical Standard BTS 2016/2251. The amendments temporarily extend the period during which EEA UCITS are eligible collateral under the UK margin regime, until end-December 2022. “2.9 The PRA has given due regard to the […]

On 2 June 2021, the PRA and FCA published an open letter reviewing good practice in relation to the commonly-used Delivery vs Payment (DVP) mechanism. DVP is a long-standing market convention, requiring that cash payment for securities is made either very shortly before or simultaneous with delivery of securities. Although an effective mitigant for a […]

The PRA and FCA yesterday launched a joint consultation on whether to align UK EMIR margin requirements with the rest of the world and continuing market practice. One would hope that if any responses are received by the 19 May 2021 deadline, they would be unanimously supportive. The consultation covers the following aspects: IM phase- […]

As expected, ISDA has yesterday opened the 2020 UK (PRA Rule) Jurisdictional Module Protocol (UK Module) for adherence. The new UK Module joins its stablemates as part of the ISDA Resolution Jurisdictional Modular Protocol, replacing the previous 3 May 2016 UK (PRA Rule) Module with a shiny, new Brexit-ed version. At the expiry of the […]

The FCA’s recently published Stocktake Report reviewing the implementation of the Senior Managers and Certification Regime (SM&CR) is a polite criticism of senior managers and their superiors in the banking sector. The report consisted of interviews with trade associations, Banking Standards Board, FCA and the PRA to understand how SM&CR has been implemented since it […]

A brief spotlight through the fog swirling around the upcoming obligation to exchange margin on forward foreign exchange. There was a widespread, if only whispered, expectation that a 7/8 November ESMA Board of Supervisors meeting would result in an official announcement of forbearance. While the EU has no equivalent mechanism to the CFTC’s enthusiastic use […]

Introduction On 3 May 2016 The International Swaps and Derivatives Association (ISDA) launched the “ISDA Resolution Stay Jurisdictional Modular Protocol” (the “JMP”).  The JMP is designed to enable market participants to comply with regulations in a number of jurisdictions which, broadly, require banks to obtain consent from their counterparties for the inclusion of statutory stays […]

Introduction Article 55 of the BRRD requires Member States to ensure that in-scope institutions include a contractual term by which the creditor or party to the agreement creating a liability recognises that the liability in question may be subject to the write-down and conversion powers within the BRRD and agrees to be bound by any […]