On 15 January 2025, the United States Commodity Futures Trading Commission (US CFTC) and the Bank of England issued statements on the release of Final Report on Transparency and responsiveness of initial margin in centrally cleared markets – review and policy proposals addressing transparency and responsiveness of initial margin in centrally cleared markets. The report, published by the Basel Committee on Banking Supervision (BCBS), the Committee on Payments and Market Infrastructures (CPMI), and the International Organization of Securities Commissions (IOSCO), represents a culmination of collaborative efforts to strengthen financial stability in response to market challenges observed in recent years.
The report was co-chaired by the US CFTC and the Bank of England. It builds on the September 2022 report Review of Margining Practices, which identified six critical areas for policy improvement following the market turmoil in March 2020. After extensive data analysis and consultations with industry stakeholders, the group finalised 10 policy proposals aimed at improving the transparency of margin practices and ensuring better responsiveness in centrally cleared markets.
The collaborative efforts began in response to the heightened volatility in financial markets during March and April 2020. The newly published report incorporates findings from a comprehensive review of margin calls during that period and further analysis conducted during the commodity market volatility in 2022.
Industry consultation and public feedback in 2024 played an important role in refining the proposals. The ad hoc BCBS-CPMI-IOSCO margin group conducted outreach events and sought input from a wide range of market participants, ensuring the final recommendations addressed practical challenges while maintaining financial stability.
In addition to this report, related publications include the CPMI and IOSCO report on streamlining variation margin processes in cleared markets and the BCBS and IOSCO report on margin models in non-centrally cleared markets, reflecting a coordinated effort to address margining issues across financial sectors.
The 10 policy proposals aim to enhance the transparency of margin frameworks, improve the evaluation of margin responsiveness, and strengthen the financial resilience of cleared markets. Sasha Mills, Executive Director for Financial Market Infrastructure at the Bank of England, praised the international coordination and stated: “The international work on centrally cleared initial margin is a powerful example of addressing financial stability risks through international coordination across authorities and committees. The Bank will continue to support this work as standard-setting bodies consider how best to implement the proposals.”
Richard Haynes, Deputy Director of the US CFTC’s Division of Clearing and Risk, stated: “The BCBS-CPMI-IOSCO margin group, by focusing on detailed data from a broad set of global regions, was able to sift between market rumours and reality, and achieve a balanced and pragmatic set of policy conclusions for implementation.”
The initial discussions following the March 2020 market turmoil led to the September 2022 report that identified key areas for improvement. After approximately 854 days of data analysis, consultation, and policy development, the final report was released on 15 January 2025.
(Source: https://www.cftc.gov/PressRoom/PressReleases/9034-25, https://www.iosco.org/library/pubdocs/pdf/IOSCOPD783.pdf)
