Currency investors brace for change

In light of the Global Financial Crisis, at the 2009 G20 summit in Pittsburgh, leaders agreed to issue new rules and regulations with the primary goal of reducing systemic risk across the financial markets. One of the most impactful and far-reaching requirements issued by regulators was finalized in March 2015, when the Basel Committee on Banking Supervision and the Board of International Organization of Securities Commission (BCBS/IOSCO) published the final framework for margin rules for non-cleared derivatives, which includes currency forwards and swaps.

 Each jurisdiction’s own regulator has been responsible for drafting rules specific to its region. This paper discusses the margin rules for FX forwards and FX swaps and the inconsistency across jurisdictions, resulting in confusion and uncertainty.

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