IFLR: Initial margin prompts shift to unconventional collateral

Phase four and five firms are moving away from standard forms of eligible collateral under the uncleared margin rules (UMR), but sources warn that this will lead to delays due to lengthy negotiations. This is because jurisdictions such as Japan and the US do not accept the same forms of collateral as in the EU.

“There are certainly nuances for EU, US and Japan initial margin (IM) implementation,” said a senior in-house lawyer at a US bank based in London. She said that some forms of collateral are eligible in the EU and Japan, subject to certain parameters, while they are generally not eligible in US. “So some securities issued by financial institutions, for example, are eligible in the EU and Japan, while generally not eligible in the US,” she added.

The full article is available at https://iflrinsight.com/articles/229/initial-margin-prompts-shift-to-unconventional-collateral

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