Essentially, where on any given day a party has “Net Exposure” to its counterparty, the counterparty is required under the terms of the Global Master Repurchase Agreement to make a “Margin Transfer” to the party with the “Net Exposure” in order to extinguish that exposure. Looked at from a less formal point of view, if […]

The FCA has announced that the synthetic 1-, 3- and 6 month USD LIBOR will be extended until 30 September 2024. Previously scheduled to end on 30 June 2023, the FCA refers to the extension as a “short period”. The synthetic LIBOR tenors will be available to all market users for rate-setting of legacy contracts, […]

Sara & Hossein Asset Holdings Ltd v Blacks Outdoor Retail Ltd [2023] UKSC 2 Citations in [square brackets] refer to the judgment, which can be found here. Facts Blacks, the clothing chain, were the tenant of two properties in Liverpool owned by Sara & Hossein Asset Holdings. The two properties were governed by separate leases, […]

To the surprise of very few, HM Treasury (HMT) yesterday stated its intention to introduce a statutory instrument extending the exemption for pension funds from the clearing obligation by a period of two years and extending the temporary intragroup exemption regime by a further three years. The statutory instrument will amend Article 89 (1) of UK […]

The definition of “Margin Ratio” is the same between the 2011 GMRA, the 2000 GMRA and the 1995 GMRA.  It is important to remember that the concept of the “Margin Ratio” is only relevant for “Method A” when calculating “Transaction Exposure”. At a high level, the “Margin Ratio” is an expression of how much excess […]

ISDA has identified potential differences in global Regulators’ approach to the treatment of legacy trades as firms move in and out of the initial margin regime following the AANA calculation. The IM rules are now fully phased-in, albeit with a large proportion of counterparties in the Threshold Monitoring waiting room. IM therefore becomes a BAU […]

On the 3rd of March 2023, a follow-up letter was sent from the ISDA, the Alternative Investment Management Association (AIMA) and the Investment Association to the PRA and the BoE. This letter set out the proposal to make permanent UK EMIR temporary exemptions for certain equity options by removing initial margin and variation margin.   […]

At a high level, under the GMRA, if one party has “Transaction Exposure” to its counterparty, the counterparty must make a “Margin Transfer” to the party with “Transaction Exposure” in order to extinguish that “Transaction Exposure”. Conceptually, “Transaction Exposure” is best understood by asking the question “In relation to a particular Repurchase Transaction, if we […]

What is EMIR 3? At the end of last year the European Commission released its proposal for EMIR 3, the latest in a series of reforms of European trading. This latest proposal includes a crucial intention to move a significant proportion of euro derivatives trading to EU CCPs, which will have significant implications for both […]