The COVID-19 pandemic has had a significant impact on our lives and our livelihood. It has forced businesses into bankruptcy and exposed a wide range of socio-economic issues. The financial sector is not immune to the pandemic and is dealing with extreme market volatility.
Early signals of financial stress were received in late March when a leading Dutch bank group announced that it marked losses in the millions due to a failed margin call. The Basel Committee on Banking Supervision quickly acknowledged the disruption and published guidance to delay phases 5 and 6 of the Uncleared Margin Rules (UMR) each by a year. This increased market volatility, and the relief from regulators has unique implications for financial institutions that require them to re-calibrate their UMR compliance efforts.