CPMI-IOSCO publish discussion paper and call for comments on streamlining variation margin in centrally cleared markets

14 February 2024

The effective practices cover intraday VM call scheduling and frequency, treatment of excess collateral, the pass-through of VM by CCPs and transparency between CCPs, clearing members and their clients.

CPMI and IOSCO call for interested parties to comment on eight effective practices that address CCPs’ and clearing members’ variation margin (VM) processes and transparency.
• The effective practices cover intraday VM call scheduling and frequency, treatment of excess collateral, the pass-through of VM by CCPs and transparency between CCPs, clearing members and their clients.
• The effective practices supplement the Principles for Financial Market Infrastructures (PFMI) and CCP resilience guidance by providing examples of how these standards can be met.
The BIS Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) today published the report “Streamlining variation margin in centrally cleared markets – examples of effective practices”, which sets out for consultation eight effective practices addressing variation margin (VM) processes and transparency between CCPs, clearing members and their clients.
Interested parties are invited to comment on this report.
The eight effective practices aim to provide examples of how standards set out in the PFMI and CCP resilience guidance can be met. They are intended to inform CCPs in designing their VM call and collection processes.

Among the examples covered are:
• Scheduling, frequency and timing of intraday VM calls.
• Offsetting VM call requirements against other obligations where possible.
• Pass-through of VM by CCPs.• Use of excess collateral to meet VM obligations.
• CCP and clearing member transparency in VM requirements and processes.

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