EFAMA agrees with the FSB that market participants should integrate the management of margin and collateral calls into their risk management, governance, and operational processes. 

Recent market developments, and in particular the UK mini-budget crisis in September 2022 and the prior failure of Archegos in April 2021, have demonstrated that greater scrutiny may be necessary around the use of leverage in global capital markets. We doubt however that the proposed recommendations will reduce the ‘excessive’ pro-cyclical behaviour of investment funds allegedly resulting from margin calls since the European regulation already requires these funds to consider such calls in their liquidity management processes, unlike other market participants. 

We therefore call for several adjustments to the recommendations (e.g., a system-wide approach, a focus on non-regulated market participants, and a greater emphasis on proportionality for market participants, such as funds, that have a limited exposure to derivatives) as well broader market reforms (e.g., more transparent and predictable margin calls and more resilient and accessible repo markets).