Streamlining variation margin in centrally cleared markets – examples of effective practices

Final report by the BIS Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO).

The report sets out eight effective practices which aim to provide examples of how standards set out in the CPMI-IOSCO Principles for Financial Market Infrastructures, as supplemented by the relevant guidance, can be met. The report forms one element of a comprehensive approach jointly taken by the Basel Committee on Banking Supervision (BCBS), the CPMI, IOSCO and the Financial Stability Board (FSB) to improving transparency, streamlining margin processes, increasing the predictability of margin requirements and improving the liquidity preparedness of non-bank market participants for margin calls. The report should be read alongside other closely related reports by the BCBS, the CPMI, IOSCO and the FSB (see links below).

The effective practices have taken into account feedback from industry on the discussion paper Streamlining variation margin in centrally cleared markets – examples of effective practices published in February 2024 and build on the BCBS-CPMI-IOSCO report Review of margining practices published in September 2022. The September 2022 report recommended international policy work aimed at, among other things, exploring ways to foster market participants' preparedness for above-average variation margin (VM) calls through the efficient collection and distribution of VM in centrally cleared markets. The effective practices also took into account the findings of the BCBS-CPMI-IOSCO report Margin dynamics in centrally cleared commodities markets in 2022 published in May 2023.