On 31 March 2016, the Financial Services Agency of Japan (JFSA) finalised a set of regulations on margin requirements for non-centrally cleared OTC derivatives together with its responses to public comments. The in-scope entities are required to collect and post variation margin and initial margin in accordance with the final margin regulations. The margin requirements will be phased in from 1 September 2016. The final margin regulations are in most respects in harmony with the US and EU rules. Some differences remain, such as timing of collection of margin, method of segregation of IM and comparability determination for purposes of substituted compliance. These, together with the documentation impact of the regulations and the challenges of implementation, will no doubt continue to be the focus of discussions and developments over the next few months as September 2016 approaches.
This Client Briefing provides an overview of the finalised margin requirements and JSFA's responses to public comments.