The Australian Prudential Regulatory Authority (APRA), the Monetary Authority of Singapore (MAS) and the Hong Kong Monetary Authority (HKMA) have all now confirmed the phase-in timeframes for margin and risk mitigation requirements for non-centrally cleared derivatives, as follows:

• APRA has released a letter to industry and published updated Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives (with implementation timetable). The implementation timetable confirms that the initial margin and variation margin requirements will be phased in, commencing on 1 March 2017 for APRA covered entities contracting with covered counterparties, where each counterparty belongs to a margining group whose aggregate month-end average notional amount of uncleared derivatives contracts for the reference period exceeds AUD 4.5 trillion (for initial margin) and AUD 3 billion (for variation margin).

• The MAS has issued Circular No. MPI 02/2016 announcing the publication of Guidelines on Margin Requirements for Non-Centrally Cleared OTC (Uncleared) Derivatives Contracts. The MAS has also published their Response to Feedback Received on their Policy Consultation on Margin Requirements for Non-Centrally Cleared OTC Derivatives Contracts, which closed in November 2015. The Guidelines set out the phase-in of initial margin requirements, commencing on 1 March 2017 for MAS covered entities contracting with covered counterparties or foreign covered entities, where each counterparty belongs to a consolidation group whose aggregate notional amount of uncleared derivatives contracts exceeds S$4.8 trillion, and the exchange of variation margin for all MAS covered entities from 1 March 2017. There will be a six month transitional period from 1 March 2017 during which MAS covered entities will be expected to make progress towards meeting the Guidelines as soon as practicable. 

• The HKMA has likewise written to authorised institutions informing them of the phase-in of initial margin requirements for phase 1 institutions (authorised institutions that have an average aggregate notional amount of non-centrally cleared derivatives of more than HKD 24 trillion) and the exchange of variation margin for all covered entities from 1 March 2017.  There will be a six month transitional period until 1 August 2017, during which authorised institutions will be expected to make progress towards meeting the required margin exchange requirements. The HKMA will monitor progress but will not apply the margin requirements retrospectively to transactions entered into during the transitional period. If members have any questions, please contact Kher Sheng Lee, Adam Jacobs-Dean or Adele Rentsch.