Effective from 2020-10-05 - Oct 04 2020 To view other versions open the versions tab on the right
4.
Margin requirements for non-centrally cleared derivatives have two main benefits:
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Reduction of systemic risk: Margin requirements for non-centrally cleared derivatives would be expected to reduce contagion and spillover effects by ensuring that collateral is available to offset losses caused by the default of a derivatives counterparty. Margin requirements can also have broader macroprudential benefits, by reducing the financial system’s vulnerability to potentially destabilising procyclicality and limiting the build-up of uncollateralised exposures within the financial system.
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Promotion of central clearing: Margin requirements are expected to promote central clearing, making the G20’s 2009 reform programme more effective. This could, in turn, contribute to the reduction of systemic risk.
