Traders Face More Margin Scrutiny on Trillions of Derivatives

Trillions of dollars of derivatives beyond the reach of central clearinghouses face more regular checks as the industry moves to address criticism it was caught flat-footed in episodes of volatility.

The International Swaps and Derivatives Association, the main industry body for the market, wants traders to adjust margins more often, in order to buffer losses if bets go awry. The Standard Initial Margin Model, or SIMM, will undergo semiannual instead of annual recalibrations from 2025, according to ISDA.

ISDA hopes the changes will help allay concerns by regulators who’ve highlighted the potential for hedge funds that have amassed under-collateralized positions ...