Response to joint Consultation on draft RTS on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP

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Question 2. Are there particular aspects, for instance of an operational nature, that are not addressed in an appropriate manner? If yes, please provide the rationale for the concerns and potential solutions.

We refer to Chapter 1, Article 2, GEN (Risk management procedures in specific cases) paragraphs 3 and 5. Paragraph 3 provides that the parties may agree that no initial margin needs to be exchanged up to EUR 50 million provided that the parties hold capital against their exposure to their counterparties. We presume that this exemption is able to be applied if the initial margin obligation between the parties exceeds EUR 50 million so that only the amount exceeding the threshold would be required to be transferred as initial margin to the other group and not the total amount but consider that this could be clarified further.

Question 4. In respect of the use of a counterparty IRB model, are the counterparties confident that they will be able to access sufficient information to ensure appropriate transparency and to allow them to demonstrate an adequate understanding to their supervisory authority?

No response.

Question 6. How will market participants be able to ensure the fulfilment of all the conditions for the reuse of initial margins as required in the BCBS-IOSCO framework? Can the respondents identify which companies in the EU would require reuse or re-hypothecation of collateral as an essential component of their business models?

No response.

Name of organisation

IG Group Holdings PLC