Indeed, the Committee on the Global Financial System (CGFS) concluded that margining practices in OTC derivatives and haircut-setting in SFTs are a source of procyclicality in the financial system, and recommended enhancements to these practices in order to dampen the build-up of leverage in good times and soften the system-wide effects in bad times.
[13] Furthermore, the CGFS encouraged macroprudential authorities to consider measures that involve countercyclical variations in margins and haircuts. Since then, regulatory progress has been made to limit systemic risk arising in derivatives and SFT markets.