Hazy guidance causes chaos on first day of VM regime

"We don’t know what the rules are," says one senior banker

Confusion reigned on the first day of the variation margin regime for non-cleared derivatives as dealers struggled to interpret last-minute regulatory guidance aimed at averting a market shutdown.

As trading got underway, some dealers rejected trades with non-compliant counterparties, while others waved them through – especially if they were risk reducing – and at least one buy-side firm refused to trade with banks that had failed to sign new collateral agreements before the deadline.

“There