Tag: uncleared margin rules

With less than a month to go, the pressure is on for buy-side firms to finalise documentation and custodial arrangements on their initial margin.

Custodians are under scrutiny from their buy-side clients to develop new collateral management capabilities in order to help minimise the impact of UMR.

The study from State Street of 300 buy-side firms showed less than a fifth were fully ready to comply from September 2021 or September 2022.

JP Morgan's Collateral Transport tool will act as the 'brain' for buy-side firms to manage assets used for securities lending or to meet margin calls.

Initial margin collected by phase one firms for their non-cleared derivatives totalled $173.2 billion, an increase of 10% compared to year-end 2018. 

Asset managers receive respite from authorities in implementing the final phase of the uncleared margin rules as coronavirus continues to impact regulation.

The group of 20 industry bodies have said the outbreak has resulted in a significant delay for both custodians and buy-side firms in carrying out heavy onboarding tasks

The majority of respondents said the global pandemic was impacting their ability to prepare for upcoming regulations. 

A new study found the two-way initial margin rules for non-cleared derivatives will also result in a collateral shortfall of $60 billion alone.

Despite the extension to comply with the final phase of the uncleared margin rules, major operational challenges remain for buy-side firms.