Initial margin – Special report 2019
The initial margin (IM) ‘big bang’ may have been reined in by last-minute relief, but dealers aiming to get hundreds of buy-side firms over the documentation finish line by September 1, 2020 fear a compliance bottleneck.
Regulatory recommendations issued in July split the final phase of compliance with non-cleared margin rules in two. Firms with more than €50 billion in aggregate average notional amounts (AANA) of bilateral derivatives remain in phase five, while those with AANA down to €8 billion are part of a new sixth phase, scheduled for September 2021.
Deadlines have a knack of creeping up quickly. Custodians slapped a June date for account applications on earlier phases. For phase five, there’s talk of an earlier deadline to wade through the rush of cumbersome know-your-customer checks. That’s yet to be decided but, if there’s any chance of avoiding a bottleneck, a preparation big bang will be required in the new year.
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