EBA and Eiopa confirm changes to VM rule for forwards
Bodies aim to align EU with other jurisdictions – hinting at end of unpopular rule
European regulators have confirmed they are amending a rule that requires buy-side firms to post and collect variation margin on certain foreign exchange forwards from January 3 next year, in a fresh sign that the unpopular requirement will be permanently shelved.
Although the rule is part of a global push to margin most non-cleared derivatives, Europe is currently the only jurisdiction that applies it to buy-side users of physically settled currency forwards – a controversial stance because
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