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 new rules in our briefing of 27 January 2016.

ISDA and the other trade bodies argue that a large percentage of the market is unlikely to have made the necessary changes to their documentation to achieve compliance with the new rules by 1 March 2017 and that this in turn has the potential to lead to market disruption.

The letter calls on the regulators in all jurisdictions where the new rules on variation margin are effective on 1 March 2017 to provide a transition period of six months for all market participants to make the necessary amendments to their documentation. Regulators in Hong Kong, Singapore and Australia have already provided for a six month transition period.