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Navigating the Murky Waters of Initial Margin for OTC Derivatives

As regulators are striving to reduce systematic risk in global OTC markets, initial margin (IM) remains a significant aspect of bilateral and centrally cleared derivative markets. In March 2015 the Basel committee and the International Organization of Securities Commissions (IOSCO) revised the framework for margin requirements on non-centrally cleared derivatives due to complexities in implementation.

This white paper looks at a breakdown of the different regulations for non-centrally cleared trades, how the new IM requirements affect the OTC derivative markets participants, IM based methodologies, the potential issues of the new sanctions and how to manage the ambiguities around IM.