Vermeg and Cassini Systems partner on IM management ahead of UMR

Vermeg announced a partnership with Cassini Systems to help firms grappling with uncleared margin rules (UMR) regulations. Under UMR, investment Managers and the wider buy-side community who trade any derivatives now have to consider their initial margin, variation margin, cash buffers, eligible collateral, and funding costs.

Tying all these elements back into a true cost of trade to ensure best execution is a challenge for any firm, and can be addressedby creating a consistent and holistic view of margin, collateral and funding across the organization and trade lifecycle, writes Cassini Systems.

The requirements for firms to exchange initial and variation margins were agreed by global regulators and are being phased in. Firms affected by Phase 5 include banks, asset managers, hedge funds and pension funds. Phase 6, scheduled to take effect in September 2022, has a threshold of $8 billion AANA (aggregate average notional amount).

Vermeg was approached by several organizations for a lightweight hosted solution with sensitivity provision and calculations plus the connectivity to external platforms. Asma Belgaied Hassine, project manager at Vermeg, said during a webinar that the SaaS cloud offer has different levels of service that include: threshold monitoring, collateral exchanging, IM (initial margin) settlement, reconcilation and optimization.

The joint effort with Cassini means Vermeg will receive IM values and monitor the threshold per agreement at the Group level, with an alert in case of a breach: “If the threshold is breached and IM needs to be posted, we cover the whole margining workflow including the agreement setup and the eligibility schedule in a fully STP process,” Hassine explained. In case of IM differences, the reconciliation module identifies issues and resolve disputes, she added.

“To meet both (ISDA SIMM and Grid) IM segregation models, our triparty and third party services are a combination of both, (and) will allow both pledgor and secured parties to seamlessly and more efficiently deliver collateral to meet their regIM obligations,” said Hassine.

For those clients with a “more strategic view of their collateral management”, Vermeg also covers business lines such as credit, OTC derivatives, repos, SBL and ETD, and provides an optimizer for overall inventory utilization and to reduce the cost of collateral funding, she said.

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