On April 14, 2016, ISDA® announced publication of the 2016 Credit Support Annex for Variation Margin (New York Law) (2016 VM CSA). The 2016 VM CSA is designed to facilitate compliance with margin requirements for non-cleared derivatives scheduled to begin phase-in this September in the US and Japan (the EU schedule is yet to be determined). This is the first in a series of documents that will allow parties to negotiate collateral terms that comply with variation margin (VM) requirements for uncleared swaps in these jurisdictions.

This is the first new version of the main ISDA credit support annex since ISDA published the ISDA 1994 Credit Support Annex (1994 CSA) over 20 years ago. The 1994 CSA has been the primary credit support document used in the over-the-counter (OTC) derivatives markets over that time.

Like the 1994 CSA, the 2016 VM CSA is designed to be used as an annex to the Schedule to the ISDA Master Agreement. Its terms supplement and form part of the ISDA Master Agreement, used to document bilateral derivatives transactions.

The 2016 VM CSA is similar in collateral mechanics and operation to the 1994 CSA. However, it specifically excludes initial margin (IM) ("independent amount" under the 1994 CSA), as well as any transactions specified by the parties in Paragraph 13 of the 2016 VM CSA.

Note that although the 2016 VM CSA is a New York law document, this does not mean it may only be used to comply with US margin rules. The determination of which jurisdiction's swaps rules apply is based on the jurisdiction of the parties to the swap, not the choice of governing law for their transactions.

For further details on the 2016 VM CSA, see Practice Note, The New ISDA® Credit Support Annexes and Global Margin Compliance for Uncleared Swaps: ISDA 2016 Variation Margin CSA.

The 2016 Credit Support Annex for Variation Margin (New York Law) is available here.

For details on the US margin rules for non-cleared swaps, see Practice Note, The Dodd-Frank Act: Margin Posting and Collection Rules for Uncleared Swaps.

For details on the EU margin rules for non-cleared swaps, see Practice Note, EMIR: risk mitigation requirements for uncleared OTC derivatives.