The IM challenge
Following the 1 September 2022 Phase 6 deadline for Initial Margin (IM) implementation, at least on paper, the IM task is done. In practice, there is still a long (if less steep) hill to climb. Phase 6 IM incorporated an estimated 800 firms requiring documentation for 10,000+ relationships, a number in excess of all previous 5 phases. Given the inevitable strain on legal and operational resource, it is no surprise that an estimated two thirds of newly in-scope market participants have sought to rely on threshold monitoring arrangements. Subject to their particular agreed levels, as counterparties approach the 50mn exposure threshold, full IM arrangements must be finalised.
Although the official deadline has passed, in reality it has been diffused. The majority of “heavy lifting” in terms of IM documentation still lies ahead. Even after this is complete, IM compliance will become a BAU requirement for many new relationships. In addition, the global scope of the margin regime is continually evolving with the addition of new regimes.
Our IM expertise
The need for IM expertise continues and it will continue to be in short supply. DRS has been heavily involved in all six IM phases, assisting clients (whether Sell-side, Buy-side or Custodian) to achieve compliance by the applicable deadlines. Drawing on this collective expertise, we have created an in-depth, though not exhaustive, guide to the 2018 “Next Generation” CSD. We hope this document is of assistance.
Drawing on our expertise, we’ve created an in-depth guide to the most vital clauses of Initial Margin, with commentary and guides to help you understand every clause of the document.