increasing transparency will help, much will depend on the liquidity management of clearing members and clients. it is worth noting that in our examination we found that there was little reliable data available on client preparedness for stressed margin call. future work on in this area could : seek to identify enhancements to liquidity preparedness, including liquidity measures for nbfis ; and look into the effectiveness of intermediaries ’ provision of liquidity to clients during stress, also considering how clearing members can encourage and facilitate greater liquidity preparedness of clients. this is part of the broader issue that i noted at the outset about the ability of non - bank finance to insure against severe but plausible liquidity stress. it is an issue that the fsb should take forward as part of its work programme on enhancing liquidity resilience in the nbfi sector. prompt and transparent margining and, where possible, central clearing are essential to the resilience of the financial system. in times of stress, margin requirements will increase – as i said earlier that is a feature of the system, not a bug. but at the same time we need to do everything possible to ensure that the impact is not unnecessarily pro - cyclical, that market participants have the tools to prepare and manage that impact and that they do so. the march 2020 ‘ dash for cash ’ has given us a valuable lesson, we should not waste it. 1 ben bernanke has pointed out that panics can be a major cause of credit crunches. reforms that avoid such panic reduce the likelihood that financial stress transmits to real economy stress. 2 fsb ( 2017 ) report on effectiveness of derivatives reforms. 6 / 6 bis central bankers'speeches

a bug in the system, it is a feature. as markets move, losers have to pay variation margin to winners. and as risks grow, initial margin rises to protect the members of a clearing house from the consequences of a future default by other members. this characteristic of margin is unavoidable if we are to ensure that collateralisation keeps pace with risks and counterparty credit risk is minimised. but it is right to try to dampen this dynamic to the extent practicable and to avoid unwarranted procyclicality. against that background, let me set out the findings of the fsb group on margin and the proposed next steps. by bringing together a new extensive set of quantitative data and survey responses from an array of global ccps, clients and intermediaries, we were able to clarify the quantitative picture of the margin dynamics during the ‘ dash for cash ’. first, this revealed the scale of the shock on margin call. the total initial margin required by ccps increased by over 70 % ( roughly $ 300 billion ) from the onset of the crisis to its peak in the ‘ dash for cash ’ period. daily variation margin calls during the period of most acute stress in march 2020 were significantly higher than average flows observed between january and february 2020, increasing by over 500 %, from around $ 25 billion at the onset of the crisis to a peak of around $ 140 billion. to put this into perspective us open - ended funds ( oefs ), which represent around half of the global oef market, saw a similar magnitude of outflows in march, at just under $ 350 billion. second, we identified significant dispersion in the size of initial margin increases across, and within, asset classes. the increases were most pronounced in exchange - traded derivatives ( etd ) products and equity securities. exchange - traded derivatives accounted for two - thirds of the total required across all asset classes, while initial margin collected by ccps clearing cash equities increased by the most in relative terms ( more than 300 % ). the differences we saw in margin dynamics across asset classes are partially explained by differences in the size of the shock experienced in each asset class. some products, such as etd equities, saw unprecedented shocks to market prices and increases in volatility while other etd products, such as metals and agriculture, saw relatively mild shocks relative to historical precedents. in this context it is to be expected that some margin models