About a-team Marketing Services
The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Letter to the Editor

Subscribe to our newsletter

From Akber Datoo, Managing Partner, D2 Legal Technology

Earlier this week, the European Supervisory Authorities (EBA, EIOPA and ESMA) published final draft Regulatory Technical Standards (RTS) outlining the framework of the European Market Infrastructure Regulation (EMIR).

While some may consider this as progress, it is unfortunately yet another indicator of the significant challenges the international finance industry – both financial institutions and regulators – faces in successfully addressing risk mitigation from OTC derivatives.

While the broad parameters of the G20 reform programme to increase transparency and limit excessive and opaque risk taking make complete sense and are welcomed, the reality paints a different picture:

(i) In August 2014, the International Swaps and Derivatives Association (ISDA) requested a two-year period after the publication of the full set of final rules to put margin arrangements in place. Even with this week’s announcement, the industry still does not have this full set of final rules, and we still await rules from the Hong Kong Monetary Authority, Monetary Authority of Singapore, US Securities and Exchange Commission, Japanese Financial Services Agency and Australia. If it has taken this long to define the final rules, surely it has to be understood that the implementation phase also needs time to get it right.

(ii) As it becomes increasingly apparent that regional differences in the final rules will cause market fragmentation and unintended consequences, the question has to be asked: as regulators realise the impact of unharmonised rules, will some of the published final rules become ‘pencilled final rules’ rather than ‘dry ink final rules’?

The significance of the operational changes and documentation challenges associated with margin reform are not to be underestimated. While financial institutions themselves are hardly faultless, if the industry collectively is to truly address this critical aspect of international banking it is high time for the regulators to take greater responsibility for providing clear and coordinated guidance, as well as sufficient time to implement. Getting the implementation wrong simply makes the financial system a less stable place rather than the safer haven underpinning the goal of the regulation.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Enabling data democratisation with trusted and well governed data

Date: 7 June 2022 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Data democratisation enables users across an organisation to access and analyse data in a digital format. Its benefits are many and include allowing employees to make informed business decisions without recourse to IT, gaining a better understanding of customers,...

BLOG

Regulatory Oversight Committee of the LEI Revises Policy on Level 2 Data Reporting

The Regulatory Oversight Committee (ROC) of the Global LEI System (GLEIS) has revised two elements of policy covering the reporting of LEI parent relationship data, also known as Level 2 data. To improve the usability of Level 2 data, the ROC has revised the list of opt-out reasons that can be used by an entity...

EVENT

RegTech Summit London (Redirected)

Now in its 4th year, the RegTech Summit in London explores how the European financial services industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

Regulatory Data Handbook 2021/2022 – Ninth Edition

Welcome to the ninth edition of A-Team Group’s Regulatory Data Handbook, a publication dedicated to helping you gain a full understanding of regulations related to your organisation from the details of requirements to best practice implementation. This edition of the handbook includes a focus on regulations being rolled out to bring order and standardisation to...