While it may be a “simpler” document than an IM CTA/CSA/CSD, timely negotiation of an Account Control Agreement (an “ACA”) is critical to achieve compliance by the Phase 6 deadline. All Custodians are on a rigid timeline, failure to negotiate ACAs across counterparty pairings by the required date will leave your Custodian with insufficient time to complete the mechanics of account setup.
The Custodian element has presented a consistent challenge in the Initial Margin (“IM”) compliance process. IM Phase 1 saw a large proportion of the dealer market unable to trade for days following the deadline. While eventually successful, IM Phase 5 threatened the same. IM Phase 6 represents a threefold increase of the in-scope population of counterparties. While there have been some notable efficiency gains on the IM journey to date (for example, the Bank of New York Mellon (“BNYM”) has “slimmed down” its ACA, removing little-used elections, it has developed an online portal for the exchange of collateral schedules and its ACA is now integrated into CreateiQ) IM Phase 6 represents
a vast increase in “demand” largely accompanied by a static “supply” in terms of market- wide experience.
Our long-proven expertise
DRS has long-standing expertise in all aspects of the ACA – its specialist teams act and have acted for a number of major financial institutions as well as supporting custodian banks, from initial playbook-building, through document negotiation to final legal data upload.
Our clients trust us to manage their day-to-day contract requirements in accordance with their policies and processes. We reduce costs and our clients are left free to direct resource to other priorities. To provide cost certainty, we can deliver our service for a fixed price per agreement. In addition, our document management service is completely flexible, meaning we can scale up or down rapidly if your requirements change.
We can support you with minimal lead time and little upfront effort on your part as the challenge is completely familiar to us; it’s what we do. You can rely on us to be proactive and adapt to the unexpected. Our combined capability delivered from our centres in London and Newcastle allows us to deliver material cost savings without compromising quality or responsiveness.
Drawing on our expertise, we’ve created an in-depth guide to the most vital clauses of the ACA, with commentary and guides to help you understand every clause of the document.