Reserve-Bank-and-MBIE-open-public-consultation-on-foreign-margin-requirements-for-OTC-derivatives

Reserve-Bank-and-MBIE-open-public-consultation-on-foreign-margin-requirements-for-OTC-derivatives

The Reserve Bank of New Zealand and the Ministry of Business, Innovation and Employment have started a public consultation on the implications for New Zealand of foreign margin requirements for over-the-counter derivatives.

New Zealand has no margin requirements in over-the-counter derivatives, but several banks registered to operate in New Zealand will likely have to comply with margin rules being implemented in foreign jurisdictions. Margin is collateral exchanged by derivative market participants in order to protect against the risk posed by credit exposures and to reduce the risks of financial market contagion if a derivative contract counter-party defaults.