On 15 December 2016 the delegated regulation on margin (RTS) was published in the Official Journal of the European Union. The variation margin rules contained in the RTS will come into force on 1 March 2017. See further details on the new rules in our briefing of 27 January 2016.

On 7 February 2017, ISDA and a number of other trade bodies wrote an open letter to a range of regulators calling for regulatory forbearance in respect of the new rules on variation margin. See further details on the open letter in our briefing of 13 February 2017.

Following a statement on 23 February 2017 by the European Supervisory Authorities, the Financial Conduct Authority (FCA) published a statement to confirm that it understands that some firms may not be in a position to exchange variation margin fully in compliance with the RTS by 1 March 2017. The FCA will, therefore, take a risk-based approach and use judgement as to the adequacy of progress, taking into account the position of particular firms and the credibility of the plans they have made.

Where a firm has not been able to comply fully, the FCA will expect it to be able to demonstrate that it has made best efforts to achieve full compliance, and be ready to explain how it will achieve compliance in as short a time as practicable for all in-scope transactions entered into from 1 March 2017. The FCA will expect detailed and realistic plans to be in place, which the FCA may request to see at any time.