Margin Requirements for Uncleared Derivatives (Margin Reform)

The aim of the margin reform framework (EMIR/BCBS) is to reduce systemic risk and requires all financial firms and systemically important non-financial entities that engage in non-centrally cleared derivatives to exchange initial margin (IM) and variation margin (VM) as well as segregation of IM. These requirements have required much change by institutions and the market and necessitated wide reaching changes in documentation and systems in order to be able to comply. A  number of phases were set out according to the relative size and perceived systemic influence of counterparties. We are now in the process of complying with Phase IV and Phase V (by September 2020).

What we do?

D2LT has helped clients understand the implications of the margin reform rules and to prepare data models to assist them in identifying the data that they will need from the new documents in order to be able to continue to operate without undue disruption. We have done this by working with Legal and Collateral Management departments as well as others such as Risk.

We have been able to identify data gaps in current systems and to recommend necessary changes so that the new data can be accurately captured and to allow institutions to carry on their business and to avoid the pitfalls of the new regulations.

D2LT will also assist clients to negotiate the revised collateral documentation with counterparties.