Jurisdictions

Back to BCBS Margin rules

United States

Entity scope (in scope, out of scope, exemptions)

In-scope entities:

Covered Swap Entities (CSEs)
Financial End Users (FEU) with or without "material swaps exposure"
An entity has "material swap exposure" if (at group level) it have an average daily aggregate notional that exceeds USD8 billion in uncleared swaps, SBS, FX forwards and FX swaps for June, July and August of the previous calendar year

Exemptions:

The regulatory margin rules do not apply to:

Sovereigns
Central banks
Multilateral development banks
Bank of International Settlements (BIS)
Transactions with commercial end users
Qualifying small banks (generally insured depository institutions and credit unions with less than USD10 billion in assets)
Qualifying captive finance companies
Treasury affiliates
Certain cooperative entities that would satisfy an applicable clearing exemption

Transactions scope (in scope, out of scope, exemptions)

In-scope transactions:

Initial margin (IM) and variation margin (VM) requirements generally apply to all OTC derivative trades.

Exemptions:

Physically settled FX (spot, fx forwards and fx swaps).

Calendar if different form BCBS-IOSCO

Initial margin:

Aligns to BCBS-IOSCO calendar

Variation margin:

1 September 2016 – Largest market participants - Aligns to BCBS-IOSCO calendar

1 March 2017 –

All other in-scope entities regulated by the Commodity Futures Trading Commission (CFTC) and Prudential Regulators (PRs) - Aligns to BCBS-IOSCO calendar
CFTC and PRs have both issued statements of relief under certain conditions. Retroactive application of VM to trades entered into on and from 1 March 2017.

Eligible collateral

Eligible collateral would generally include the examples below. However, HSBC will continue to have its own requirements and policies with regard to the collateral it can accept from this list.

Cash
High-quality government and central bank securities
High-quality corporate bonds
High-quality covered bonds
Equities included in major stock indices
Gold

Please click here to review the US Commodity Futures Trading Commission's (CTFCs) list of eligible collateral. Please check Article 23.156 (p. 701).

Please click here to review the US Prudential Regulators (PR) list of eligible collateral. Please check § __.6 Eligible collateral (p. 74903).

Any other specificity

N/A

Canada

Entity scope (in scope, out of scope, exemptions)

In-scope entities:

Covered Entities. A Covered Entity is a financial entity belonging to a consolidated group whose aggregate month-end average notional amount of non-centrally cleared derivatives for March, April, and May of any year following the implementation date exceeds CAD12 billion.

Exemptions:

Sovereigns
Central banks
Certain multilateral development banks
Bank for International Settlements (BIS)
Public sector entities
Special purpose entities (SPE) established for the purposes of financing a specific pool of assets
Treasury affiliates that undertake risk management activities on behalf of affiliates within corporate group

Transactions scope (in scope, out of scope, exemptions)

In-scope transactions:

Initial margin (IM) and variation margin (VM) requirements generally apply to all OTC derivative trades.

Exemptions:

Physically settled FX (spot, fx forwards and fx swaps).

Calendar if different form BCBS-IOSCO

Aligns to BCBS-IOSCO calendar

Eligible collateral

Eligible collateral would generally include the examples below. However, HSBC will continue to have its own requirements and policies with regard to the collateral it can accept from this list.

Cash
High-quality government and central bank securities
High-quality corporate bonds
High-quality covered bonds
Equities included in major stock indices
Gold
Collective Investments in Transferable Securities (UCITS) and mutual funds

Please click here to review the Office of the Superintendent of Financial Institutions (OSFIs) list of eligible collateral.

Any other specificity

N/A

Europe

Entity scope (in scope, out of scope, exemptions)

In-scope entities:

Financial counterparties (as defined in EMIR) and non‐financial counterparties ("NFCs") above the clearing threshold (as specified in EMIR) must exchange VM and IM on a bilateral basis, subject to exemptions.

Out-of-scope entities:

Transactions with NFCs below the clearing threshold ("NFC-s") (note that some securitisation vehicles fall within this category)
Non-EU entities that would be NFC-s if established in the EU

Exemptions:

Sovereigns
Central banks
Multilateral development banks
Bank of International Settlements (BIS)
Issuers of covered bonds and covered pools have a specific exemption if certain conditions are met

Transactions scope (in scope, out of scope, exemptions)

In-scope transactions:

Initial margin (IM) and variation margin (VM) requirements generally apply to all OTC derivative trades

Exemptions:

Physically settled FX (spot, fx forwards, fx swaps, and principal of cross currency swaps) which can be IM exempted. Physically settled FX can also be exempted for VM where a counterparty is not a CRR "institution".
Single stock options and options on equity indices are currently exempted, but this derogation may be removed in the future.

Calendar if different from BCBS-IOSCO

Initial margin:

4 February 2017 – Largest market participants
All other in-scope entities will align to the BCBS-IOSCO calendar

Variation margin:

4 February 2017 – Largest market participants
1 March 2017 – All other in-scope entities - Aligns to BCBS-IOSCO calendar. European Supervisory Authorities (ESAs) expect competent authorities to generally apply their risk-based supervisory powers in their day-to-day enforcement of applicable legislation. Retroactive application of VM to trades entered into on and from 1 March 2017.

Eligible collateral

Eligible collateral would generally include the examples below. However, HSBC will continue to have its own requirements and policies with regard to the collateral it can accept from this list.

Cash
Gold
Government debt securities
Local government debt securities
Multilateral development banks' debt securities
Debt securities issued by credit Institutions and investment firms
Corporate bonds
The most senior tranche of a securitisation that is not re-securitisation
Convertible bond
Equities
UCITS

Any other specificity

N/A

Japan

Entity scope (in scope, out of scope, exemptions)

In-scope entities:

Type 1 Financial Instruments Business Operators ("Type 1 FIBOs") (typically securities houses licensed in Japan in Type 1 securities)
Banks*
Insurance companies*
Shoko Chukin Bank*
Development Bank of Japan*
Shinkin Central Bank*
The Norinchukin Bank*

*Limited to those which are Registered Financial Institutions ("RFIs")

Exemptions:

Sovereigns
Central banks
Multilateral development banks
Bank of International Settlements (BIS)

Transactions scope (in scope, out of scope, exemptions)

In-scope transactions:

The margin requirements generally apply to all non-centrally cleared OTC derivatives.

Exemptions:

Physically-settled FX forwards and swaps
Principal of cross currency swaps can be IM exempted
OTC commodity derivatives

Calendar if different form BCBS-IOSCO

Align to BCBS-IOSCO calendar

Eligible collateral

Eligible collateral would generally include the examples below. However, HSBC will continue to have its own requirements and policies with regard to the collateral it can accept from this list.

Cash
Equities included in major stock indices
Government and Central Bank Debt
Corporate Bonds
Investment Trust (including foreign investment trusts)

Though the Financial Services Agency of Japan (JFSA) has published final rules including eligible collateral, these rules are not provided in English.

Any other specificity

N/A

Hong Kong

Entity scope (in scope, out of scope, exemptions)

In-scope entities:

Financial counterparty (as per the definition under the HKMA margin SPM) belonging to a group whose month-end average aggregate notional amount of non-centrally cleared derivatives for March, April, May exceeds HKD15 billion.
Significant non-financial counterparties with group AANA of HKD60 billion or above.
For significant non-financial counterparties, if the covered counterparty has provided declaration that the derivatives transactions are predominantly for hedging, IM and VM may not need to be exchanged.

Exemptions:

Sovereigns
Central banks
Public sector entity
Multilateral development banks
Bank of International Settlements (BIS)
Counterparties located in a non-netting jurisdiction can potentially be exempted from the margin requirements provided that the authorised institutions have obtained formal legal opinion meeting the conditions required under the HKMA margin regulation.

Transactions scope (in scope, out of scope, exemptions)

In-scope transactions:

The margin requirements generally apply to all non-centrally cleared OTC derivatives.

Exemptions:

Physically settled FX (spot, fx forwards and fx swaps)
Physically settled commodity forwards
Equity options (single-stock, basket and index) are delayed until 2020
However, a covered entity may choose to agree with a counterparty to include the exempted products above

Calendar if different form BCBS-IOSCO

Initial margin:

1 March 2017: Largest market participants. Entities have been provided a 6 month transitional period
All other in-scope entities will align to the BCBS-IOSCO calendar

Variation margin:

1 March 2017: All in-scope entities. Entities have been provided a 6 month transitional period

Eligible collateral

Eligible collateral would generally include the examples below. However, HSBC will continue to have its own requirements and policies with regard to the collateral it can accept from this list.

Cash
Gold
High-quality government debt securities
High-quality Multilateral development banks' debt securities
High-quality Public sector entities' debt securities
Other high-quality marketable debt securities (excluding those securities which are issued by AIs or foreign banks)
Equities in major stock indices

Any other specificity

N/A

Last updated: 18 December 2020

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