Regulators urged to back non-cash variation margin

Market participants warn FSB on cash demands if banks curb collateral upgrade trades


Market participants want regulators to support the use of non-cash instruments for variation margin (VM) calls, in response to stress events in recent years that have led to sharp spikes in margin requirements. Non-cash collateral is already accepted by dealers and some clearing houses as initial margin, but its uptake for variation margin is rarer.

Jean-Marc Buis, head of market, liquidity and derivatives risk at AXA Group, said a key driver for systemic risk was “excessive reliance on cash as

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