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April 2019 Insights

Making Initial Margin Implementation Simple

by Rachita Maker and Shashank Pande

In the aftermath of the financial crisis, the financial services industry faced new and often onerous regulatory rules; one of which related to the implementation of margin rules for uncleared derivatives, also referred to as uncleared margin rules (UMR). Some of the issues surrounding the handling of variation margin in 2017 ranged from inefficient processes, impractical guidelines to the inability to foresee complexity of cleaning up legacy data and remediation of derivative agreements.

Non-compliance with IM regulations will limit NISCs ability to trade and options for taking on and hedging risk could impact liquidity in derivative markets. While preparation for final phases of IM seem a daunting task, prudent planning, partnering with the right service providers and identifying appropriate technology in a timely manner will help mitigate financial risk and pave the way for a seamless transition.

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