FCA welcomes BCBS and IOSCO’s decision to give firms more time to implement new trading rules because of COVID-19

April 9, 2020

The coronavirus has put traders and companies under tremendous stress. To help them deal with the current crisis, two of the leading financial regulators have given them one more year to implement new trading rules.

The Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) have extended the deadline for completing the final two implementation phases of the margin requirements for non-centrally cleared derivatives, by one year. The deadline is now set for September 1 September 1, 2022.

Firms with an aggregate average notional amount (AANA) of uncleared derivatives exceeding €50bn will now become subject to the initial margin requirements from 1 September 2021. Similarly, firms with an AANA of uncleared derivatives exceeding €8bn will now become subject to the initial margin requirements from 1 September 2022.

“This extension will provide additional operational capacity for firms to respond to the immediate impact of COVID-19 and at the same time, facilitate covered entities to act diligently to comply with the requirements by the revised deadline,” BCBS and IOSCO said in a statement.

The UK’s Financial Conduct Authority (FCA) has embraced the move. “We welcome the BCBS-IOSCO statement on deferring the initial margin requirements by a year,” the FCA said in a statement. “We will be considering, together with other authorities, how to implement the changes.”

The FCA has also taken measures to soften the blow for firms within the UK. Last week it proposed a smattering of new suggestions to help those at risk of financial harm during the current pandemic.

The range of proposed measures included a temporary payment freeze on loans and credit cards where consumers face difficulties with their finances as a result of coronavirus for up to three months, that customers with an arranged overdraft of up to £500 will be charged at zero interest for up to three months, and that banks do not downgrade people’s credit scores because of the crisis.