Few firms fully compliant for uncleared margin rules
04 April 2019 Copenhagen
Image: Shutterstock
Only 7 percent of firms are fully compliant for the Uncleared Margin Rules (UMR) due to be implemented September this year, according to SimCorp.
UMR will affect the trading of non-centrally cleared over the counter (OTCs) and the future of collateral management.
The International Swaps and Derivatives Association has estimated that the impact of UMR falls within the scope of 1,100 firms by September 2020, with the cost of non-compliance either resulting in an ability to trade, or worse, fines.
A recent SimCorp webinar, found that although the September 2019 rule only affects forms with an Aggregate Average Notional Amount (AANA) of $750 billion, by phase 5 in September 2020, this will broaden to an AANA of $8 billion.
In addition, it was noted that irrespective of what model you decide to use for initial margin calculation, the main struggle the buy side is facing, is getting the data in the right place at the right time.
Meanwhile, many of the buy side are currently focused on the London Interbank Offered Rate replacement with UMR being overlooked, despite the September deadline.
In the webinar, it was cited that this is troubling because compliance is usually a 12 to 18 month process between technology, operations, and processes.
It was added that time is running out and that firms must act now.
UMR will affect the trading of non-centrally cleared over the counter (OTCs) and the future of collateral management.
The International Swaps and Derivatives Association has estimated that the impact of UMR falls within the scope of 1,100 firms by September 2020, with the cost of non-compliance either resulting in an ability to trade, or worse, fines.
A recent SimCorp webinar, found that although the September 2019 rule only affects forms with an Aggregate Average Notional Amount (AANA) of $750 billion, by phase 5 in September 2020, this will broaden to an AANA of $8 billion.
In addition, it was noted that irrespective of what model you decide to use for initial margin calculation, the main struggle the buy side is facing, is getting the data in the right place at the right time.
Meanwhile, many of the buy side are currently focused on the London Interbank Offered Rate replacement with UMR being overlooked, despite the September deadline.
In the webinar, it was cited that this is troubling because compliance is usually a 12 to 18 month process between technology, operations, and processes.
It was added that time is running out and that firms must act now.
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