Uncleared margin rules — initial margin: It’s time to commence the journey

Abstract

This paper aims to provide significant evidence that suggests many of the impacted entities in Phases 4 and 5 are still going through the stages of discovery on the complexity of the uncleared margin rules (UMR) initial margin requirements. To educate themselves they must cultivate knowledge through those that have already gone through the process and the industry vendors that would have experienced the different issues that had arisen through the previous three phases of UMR. Cementing that understanding is going to be critical for institutions. They need to be able to mitigate the risks, problems and issues that present themselves as they build, develop and execute on an implementation plan. They also need to utilise the external levers that are available to them and give themselves the best opportunity to end up with an efficient, robust and integrated operating model that transforms their internal collateral and margin capabilities. The reader can expect to take away a number of facts, considerations and solutions that will impact security, custody and Phases 4 and will be of especial interest to 5 firms preparing for UMR in 2019 through to 2020.