ISDA CEO Scott O'Malia asserted that the implementation of non-cleared margin requirements on September 1, 2016 "went relatively smoothly given the scale of the change and the time given to the industry [to] prepare for it."
In a recent blog post, Mr. O'Malia noted that preparations were complicated "by news that European regulators wouldn't have their rules ready in time for a September launch – with Australia, Hong Kong, India and Singapore subsequently following Europe's decision to defer the start date until next year." Mr. O'Malia claimed that this delay created "new cross-border and compliance headaches."
Mr. O'Malia stated:
Adapting or agreeing [to] new collateral agreements and setting up custody accounts for every in-scope counterparty relationship cannot be completed in a matter of weeks. While only 20 or so entities were caught by the first-phase implementation in the U.S., Japan and Canada, it required negotiation or revision of hundreds, if not thousands of documents for their various subsidiaries.
Mr. O'Malia urged regulators to provide "certainty in the timeline for all jurisdictions, alongside a realistic implementation window for deferred rollouts." He also advised that the expected "big bang" caused by the launch of variation margin requirements on March 1, 2017 "could seriously test implementation capacity."
He promoted attendance at an upcoming ISDA conference in New York that will focus on implementation issues.
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