The head of International Swaps and Derivatives Association (ISDA) has called for greater clarity from regulators on a new standardised model for calculating margin requirements.
ISDA has recently developed a standard initial margin model (SIMM), a universal methodology for banks dealing in uncleared derivatives.
However Scott O ’Malia, CEO of ISDA, said in a recent blog that regulators have not yet recognised the initiative.
“Regulators need to send a clear signal that the ISDA SIMM is appropriate, giving banks the confidence to implement the model ahead of the start date,” said O’ Malia.
The ISDA SIMM was designed for banks to adopt globally as a means to avoid margin disputes.
O’ Malia also called for the US Commodity Futures and Trading Commission (CFTC) to finalise cross-border margin rules and to ensure substituted compliance determinations with overseas regulators.
“These determinations need to be made quickly. Another three-year wait, as happened with the US/EU central counterparty equivalency standoff, will hobble cross-border trading and further contribute to the fragmentation of global derivatives markets,” he added.