A new survey released January 6, 2015 by ISDA simultaneously highlights uncertainty about the application of margin requirements while supporting the importance of derivatives for risk management purposes.
Derivatives market participants are concerned about the impact of new margin requirements for non-cleared derivatives under Basel III...according to new survey by the International Swaps and Derivatives Association. The current proposals set a phase-in schedule for the posting of initial margin, starting...from December 2015...to December 2019. Variation margin posting is slated to begin for all eligible counterparties from December this year. Despite misgivings over the margin rules, derivatives remain important risk management tools. In the survey, 81% of respondents said that derivatives are important or very important to their firm’s risk management strategy, while 78% expect their use of derivatives to increase or stay the same over the first three months of 2015. The firms use derivatives for a variety of risk management purposes, with managing exposures to currencies, interest rates commodities and credit as the most popular use.