AcadiaSoft, an industry provider of margin automation solutions for counterparties engaged in collateral management worldwide, announced that the integration into the AcadiaSoft Hub of the six additional in-scope firms under Phase 2 of the new initial margin (IM) rules for non-cleared derivatives has been completed successfully. The additional firms chose to use the Hub for IM in order to comply with the new rules, which became effective on September 1, 2017 under the new regulatory framework established by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO).
Now, all counterparty groups that are in-scope for the new rules (if aggregate month-end notional amount in March, April and May 2017 is greater than €2.25 trillion on a group, consolidated basis) are using the Hub for IM calculation and reconciliation, while nearly all are also using the Hub for IM margin call issuance and response. The new regulatory framework requires a standard calculation of how much IM to exchange, which must be either schedule-based or based on an approved model, such as the ISDA SIMMTM, or Standard Initial Margin Model, calculation.
In the two weeks since the go-live date for Phase 2, disparities between IM calculations by Phase 2 firms and their trading counterparties have been much smaller as compared to the phase 1 firms that came live under the rules a year earlier.
“Day 1 average differences for Phase 2 firms were significantly reduced from Day 1 average differences for Phase 1 firms,” said Mark Demo, AcadiaSoft product director. “The Phase 2 firms have used their extra time wisely.”
As of September 1, 2018, Phase 3 firms including regional banks, pension funds and asset managers will be required to post IM for all in-scope non-cleared derivatives transactions under the new regulatory framework.