ESAs publish statement on variation margin under EMIR

Published: 24 February 2017

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Last week, ESMA, EBA and EIOPA (together ESAs) issued a statement on the VM requirements under EMIR due to go live on 1 March 2017 which confirms a pragmatic approach to be taken by national competent authorities.

The statement notes the implementation challenges that exist for smaller counterparties and expresses regret that the finance industry ‘has not managed to prepare for implementation’ by the deadline of 1 March 2017. The stated solution is that competent authorities will take a supervisory approach where counterparties document the steps they have taken toward full compliance, in particular using existing CSAs to exchange VM. The letter notes that this does not entail general forbearance, but a case by case assessment. Transactions concluded on or after 1 March 2017 will remain subject to the obligation to exchange VM. The FCA has followed up on this statement with a statement of its own confirming the best endeavours approach. IOSCO and the Federal Reserve have also provided similar statements.

If members have any questions, please contact Adam Jacobs-Dean, Oliver Robinson or Adele Rentsch.