South Africa
16 September 2025
With South Africa now having completed its journey to incorporate initial margin requirements, Carmella Haswell speaks with local participants to review the movement, and its future impact on the market

South Africa has now crossed the finish line on the final phase of the mandatory exchange of Regulatory Initial Margin (Reg IM), which took effect on 1 September. While the local market has reached the official end point of a four-year-long implementation, it appears further impacts will materialise over the coming year.
Margin requirements for non-centrally cleared over-the-counter (OTC) derivative transactions are part of the reforms introduced by the G20 following the Global Financial Crisis of 2008.
The rule was set out by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority in the Joint Standard 2.
Crossing the finish line on a five-phase implementation, any provider belonging to a group of which the aggregate month-end average gross notional amount of OTC derivatives for March, April, and May 2025 exceeded 100 billion South African rand (US$5.7 billion) must comply with the new rules.
Phasing began in 2021, with all local banks feeling the impact of the regulation over the past 12 months.
The heaviest lift has been left for last, with non-banks coming into scope on 1 September 2025.
Exploring the journey over the past four years, Gizelle Boyce, head of regulatory risk and strategy for global markets at Standard Bank, says most banks in South Africa have benefitted from the experiences under the offshore regime known as the Uncleared Margin Rules (UMR) which took place between 2016 and 2021.
Boyce notes that despite learning from the offshore experience, some surprises appeared during South Africas transition, specifically relating to nuances in the regions regulations and market.
The requirements for SIMM approval ended up being particularly onerous, and this resulted in delays in application and therefore approval delays. As of today, no local bank is approved to use this model, she explains.
The Standard Initial Margin Model, otherwise known as SIMM, sets a common methodology that all market participants can use for their initial margin calculations, reducing the costs that would be incurred if each firm developed its own model from scratch and cutting the potential for disputes, according to the International Swaps and Derivatives Association (ISDA).
Differing thresholds under local rules and the application of strictest of requirements has had a negative impact for local banks, who in some instances lost a significant amount of threshold available, which results in higher margin calls and more collateral due, adds Boyce.
Without the approval of the SIMM, firms may need to use the standardised grid method, which is more punitive, according to Joshua Govender, business development lead for Africa and the UK at Vermeg for Banking and Insurance Software, and chair for the South African Collateral Forum at the South African 厙惇勛圖 Lending Association (SASLA).
Similarly, Boyce explains that without the approval of SIMM locally, it compels the use of the more expensive schedule model, which together with a very limited collateral eligibility set, could cause liquidity constraints in the local market.
However, Govender suggests that triparty models are seen as less punitive and more efficient than bilateral arrangements.
He adds that Long Box optimisation can reduce the overall cost of collateralisation, which is critical under Reg IMs daily margining regime.
In August, Strate Collateral Services developed in partnership with Clearstream completed its first round of market testing ahead of the Reg IM implementation using its own triparty model.
Strate, South Africas central securities depository and central collateral platform, used its triparty collateral management front-end portal to enable Nedbank to fully operationalise its IM processing, while Rand Merchant Banks (RMBs) direct integration allowed for reporting and monitoring of its IM collateral activities.
At the time of this market testing, Yusef Peer, head of markets enablement at Nedbank, said: Strates triparty platform transforms initial margin processing into a streamlined, automated experience.
From instruction to pledging, it delivers speed, precision, and regulatory confidence reducing complexity and freeing up operational capacity.
The essentials for in-scope firms
Having been active in the preparation for initial margin rules in South Africa, as well as the foreign regime implementation of 2016-2021, Boyce states that the offshore requirements, although onerous, were less burdensome in some instances.
In her comparison, Boyce highlights that although South Africa needed to build the relevant models, no approvals were required to use this model.
The offshore impact was also limited to banks, with this counterparty segment being quite well prepared being both well versed in the legals and the custodian structure.
For local margin, Boyce says the inclusion of the non-bank financial institutions (NBFIs) sector which has not been impacted under the offshore rules, was a significant complicating factor, leading to longer lead times for negotiation and operational setup.
From a more positive standpoint, Govender says the incorporation of the initial margin rules provides a number of benefits for the securities lending market.
In terms of liquidity benefits, non-ZAR collateral expands the pool of eligible assets, helping firms to meet IM obligations without relying solely on ZAR-denominated instruments.
The market will also benefit from increased demand for high-quality liquid assets (HQLA). Reg IM drives demand for HQLA, explains Govender, which can be used in repo and margining, therefore boosting activity in securities lending markets.
With the move to Reg IM, Govender identifies changing market preferences. For instance, he pinpoints how lenders prefer diversified, liquid baskets with low concentration risk, while borrowers seek cheapest-to-deliver assets to minimise margin costs.
He continues: 厙惇勛圖 lending desks must optimise collateral pools to meet both trading demands and regulatory requirements, ensuring efficient asset allocation.
In his review of the regulations impact, Govender says collaboration between treasury and trading desks is now essential to optimise collateral pools and avoid liquidity bottlenecks.
While optimisation of collateral pools and assets remain essential to efficiency, Govender also believes treasury requires real-time inventory visibility into available collateral pools, while trading can adjust positions to reduce margin impact. He asserts that treasuries need to identify cheapest-to-deliver collateral options to optimisation engines.
He continues: IM forecasting and stress testing scenarios will also become essential to the overall risk mitigation for businesses.
From a Standard Bank perspective, Boyce encourages firms toward multidisciplinary teams. Reg teams, legal teams, and IT and operational teams all need to align this is further compounded by the fact that legal agreements now contain many elections relating to operational setup and technical model applications, meaning that it is critical to have these items defined before any negotiations can conclude.
Not only is it imperative for firms to align their internal teams, it is important that the industry aligns on matters relating to the regulation, so constant feedback to the regulator is being provided on some of the risks being identified such as lower thresholds applicable in some Africa.
Firms also need to be involved and raise issues proactively from the outset to help shape the rules in a way that considers South African market nuances she notes that once rules are set it is very difficult to advocate for changes.
Looking forward, Boyce believes that the impact of the Reg IM final phase will continue to evolve as more firms come into scope (based on how fast the available threshold is utilised per relationship), the market is therefore likely to see these impacts materialise over the next year.
Based on the conversations we are having, this could result in changes to traditional business being written with certain clients a move from OTC type trading to out of scope listed or repo products for example, she explains.
In her conclusion, Boyce notes: Right now, a lot of focus has been given to readiness from a legal and operational perspective, but once the costs of IM become clear, this will undoubtedly drive business decisions. Similar to what happened offshore, we also foresee more focus being given to pre-trade analytics and the ability to model margin outcomes per trade.
Margin requirements for non-centrally cleared over-the-counter (OTC) derivative transactions are part of the reforms introduced by the G20 following the Global Financial Crisis of 2008.
The rule was set out by the Financial Sector Conduct Authority (FSCA) and the Prudential Authority in the Joint Standard 2.
Crossing the finish line on a five-phase implementation, any provider belonging to a group of which the aggregate month-end average gross notional amount of OTC derivatives for March, April, and May 2025 exceeded 100 billion South African rand (US$5.7 billion) must comply with the new rules.
Phasing began in 2021, with all local banks feeling the impact of the regulation over the past 12 months.
The heaviest lift has been left for last, with non-banks coming into scope on 1 September 2025.
Exploring the journey over the past four years, Gizelle Boyce, head of regulatory risk and strategy for global markets at Standard Bank, says most banks in South Africa have benefitted from the experiences under the offshore regime known as the Uncleared Margin Rules (UMR) which took place between 2016 and 2021.
Boyce notes that despite learning from the offshore experience, some surprises appeared during South Africas transition, specifically relating to nuances in the regions regulations and market.
The requirements for SIMM approval ended up being particularly onerous, and this resulted in delays in application and therefore approval delays. As of today, no local bank is approved to use this model, she explains.
The Standard Initial Margin Model, otherwise known as SIMM, sets a common methodology that all market participants can use for their initial margin calculations, reducing the costs that would be incurred if each firm developed its own model from scratch and cutting the potential for disputes, according to the International Swaps and Derivatives Association (ISDA).
Differing thresholds under local rules and the application of strictest of requirements has had a negative impact for local banks, who in some instances lost a significant amount of threshold available, which results in higher margin calls and more collateral due, adds Boyce.
Without the approval of the SIMM, firms may need to use the standardised grid method, which is more punitive, according to Joshua Govender, business development lead for Africa and the UK at Vermeg for Banking and Insurance Software, and chair for the South African Collateral Forum at the South African 厙惇勛圖 Lending Association (SASLA).
Similarly, Boyce explains that without the approval of SIMM locally, it compels the use of the more expensive schedule model, which together with a very limited collateral eligibility set, could cause liquidity constraints in the local market.
However, Govender suggests that triparty models are seen as less punitive and more efficient than bilateral arrangements.
He adds that Long Box optimisation can reduce the overall cost of collateralisation, which is critical under Reg IMs daily margining regime.
In August, Strate Collateral Services developed in partnership with Clearstream completed its first round of market testing ahead of the Reg IM implementation using its own triparty model.
Strate, South Africas central securities depository and central collateral platform, used its triparty collateral management front-end portal to enable Nedbank to fully operationalise its IM processing, while Rand Merchant Banks (RMBs) direct integration allowed for reporting and monitoring of its IM collateral activities.
At the time of this market testing, Yusef Peer, head of markets enablement at Nedbank, said: Strates triparty platform transforms initial margin processing into a streamlined, automated experience.
From instruction to pledging, it delivers speed, precision, and regulatory confidence reducing complexity and freeing up operational capacity.
The essentials for in-scope firms
Having been active in the preparation for initial margin rules in South Africa, as well as the foreign regime implementation of 2016-2021, Boyce states that the offshore requirements, although onerous, were less burdensome in some instances.
In her comparison, Boyce highlights that although South Africa needed to build the relevant models, no approvals were required to use this model.
The offshore impact was also limited to banks, with this counterparty segment being quite well prepared being both well versed in the legals and the custodian structure.
For local margin, Boyce says the inclusion of the non-bank financial institutions (NBFIs) sector which has not been impacted under the offshore rules, was a significant complicating factor, leading to longer lead times for negotiation and operational setup.
From a more positive standpoint, Govender says the incorporation of the initial margin rules provides a number of benefits for the securities lending market.
In terms of liquidity benefits, non-ZAR collateral expands the pool of eligible assets, helping firms to meet IM obligations without relying solely on ZAR-denominated instruments.
The market will also benefit from increased demand for high-quality liquid assets (HQLA). Reg IM drives demand for HQLA, explains Govender, which can be used in repo and margining, therefore boosting activity in securities lending markets.
With the move to Reg IM, Govender identifies changing market preferences. For instance, he pinpoints how lenders prefer diversified, liquid baskets with low concentration risk, while borrowers seek cheapest-to-deliver assets to minimise margin costs.
He continues: 厙惇勛圖 lending desks must optimise collateral pools to meet both trading demands and regulatory requirements, ensuring efficient asset allocation.
In his review of the regulations impact, Govender says collaboration between treasury and trading desks is now essential to optimise collateral pools and avoid liquidity bottlenecks.
While optimisation of collateral pools and assets remain essential to efficiency, Govender also believes treasury requires real-time inventory visibility into available collateral pools, while trading can adjust positions to reduce margin impact. He asserts that treasuries need to identify cheapest-to-deliver collateral options to optimisation engines.
He continues: IM forecasting and stress testing scenarios will also become essential to the overall risk mitigation for businesses.
From a Standard Bank perspective, Boyce encourages firms toward multidisciplinary teams. Reg teams, legal teams, and IT and operational teams all need to align this is further compounded by the fact that legal agreements now contain many elections relating to operational setup and technical model applications, meaning that it is critical to have these items defined before any negotiations can conclude.
Not only is it imperative for firms to align their internal teams, it is important that the industry aligns on matters relating to the regulation, so constant feedback to the regulator is being provided on some of the risks being identified such as lower thresholds applicable in some Africa.
Firms also need to be involved and raise issues proactively from the outset to help shape the rules in a way that considers South African market nuances she notes that once rules are set it is very difficult to advocate for changes.
Looking forward, Boyce believes that the impact of the Reg IM final phase will continue to evolve as more firms come into scope (based on how fast the available threshold is utilised per relationship), the market is therefore likely to see these impacts materialise over the next year.
Based on the conversations we are having, this could result in changes to traditional business being written with certain clients a move from OTC type trading to out of scope listed or repo products for example, she explains.
In her conclusion, Boyce notes: Right now, a lot of focus has been given to readiness from a legal and operational perspective, but once the costs of IM become clear, this will undoubtedly drive business decisions. Similar to what happened offshore, we also foresee more focus being given to pre-trade analytics and the ability to model margin outcomes per trade.
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