Mainland China Publishes Margin Rules

On 6 January 2025, the National Financial Regulatory Administration (the “NFRA”) of the People’s Republic of China (the "PRC" or “Mainland China”) published the Administrative Measures on Margin Requirements for Non-centrally Cleared Derivatives Transactions of Financial Institutions (the “NFRA Margin Rules”). These long-awaited rules introduce mandatory margin requirements for in-scope non-centrally cleared derivative transactions in Mainland China, a requirement which has applied for a number of years in many international markets.

The NFRA Margin Rules will come into effect on 1 January 2026, with the requirements for variation margin (“VM”) and initial margin (“IM”) introduced in phases. VM requirements will be implemented from 1 September 2026, and IM requirement in three phases between 1 September 2027 and 1 September 2029.

The NFRA Margin Rules align with global standards for margin requirements for non-centrally cleared derivatives, as set out in the BCBS-IOSCO Margin Framework. We highlight in this Bulletin the major aspects of the NFRA Margin Rules and some questions about the application of the rules.

Linklaters Zhao Sheng have helped our clients at all stages of implementation of IM and VM arrangements from preparation and planning to drafting and negotiation. We have coverage of margin requirements in the UK, EU, US, Japan, Hong Kong SAR, Singapore, Australia and the PRC. Our experience with IM/VM implementation is extensive which includes: acting as drafting counsel to ISDA on the “Next Gen” IM documentation now used by all major counterparties throughout the globe; advising a significant number of Phase 1 through 6 firms on regulatory margin implementation globally and in Asia; and partnering with ISDA to develop ISDA Create, which is an online tool that allow firms to electronically negotiate IM documentation. Click here for more information on Linklaters Zhao Sheng’s IM/VM experience.