Our take on the BCBS and IOSCO announcement on Initial Margin regulatory changes.

What’s changed?

  • BCBS and IOSCO (plus others) have granted a one-time one year extension to Phase 5 or UMR
  • Originally all firms with an AANA for uncleared derivatives of greater than €8bn with a €50mn initial margin threshold were due to exchange IM by 01 September 2020*
  • Now, only firms with a AANA of greater than €50bn will need to be compliant by 01 September 2020*
    01 September 2020: €750bn becomes €50bn
    01 September 2021: €50bn becomes €8bn
  • Read the press release and view the timeline below for further details
ISDA Scope and Timeline*

What should you do?

For those of you with an AANA of greater than €50bn, there is no change. You need to push on towards compliance by 01 September 2020.

For those of you with an AANA between €50bn – €8bn, you have three options:

  1. One, sit back and relax, you have another year right?!
  2. Two, you’ve started your project so you might as well finish for 01 September 2020 (or close to it)
  3. Three, use the time wisely you have the opportunity to think strategically for the long term and not a tactical short-term fix

As the vast majority of firms are predicted to be in the newly created Phase 6, there will still be a rush to implement. Therefore, option one isn’t an option. Whether you’ve started or not, the extra time will allow you to actually approach a solution more strategically, potentially saving you money, time and precious human resources.

What’s the solution?

Approaching this strategically means you need to focus on what people, process and technology changes need to be put in place to minimise cost, implementation and onboarding time, and time spent maintaining and updating for future regulations or industry shifts. Choosing the right partner can help minimise the impact to your firm.

CloudMargin just announced a partnership with AcadiaSoft which provides the industry’s only end-to-end solution for initial margin.

Onboarding to this out-of-the-box connected solution via the AcadiaSoft Hub is quick and easy with one contract for all sensitivity and eligibility data, SIMM calculation, and initial margin workflow needs.

If this is of interest, contact us to set up a demo and learn more.

If you are still searching for answers about how your firm should address the initial margin changes, set up a free Health Check with our partners, IM experts, MarginTonic.

If you’re not ready to chat, we also have a ton of free IM resources for you to view at your own pace. Check them out here.

* notional values (€) referenced in this post can be translated into these other values in other jurisdictions (source: ISDA):