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Client: Various

Project Objective

Since Q3 2016, we have been instructed by seven of our clients (buy-side and sell-side institutions) to assist them in the negotiation of credit support documentation to comply with both the variation margin and initial margin specifications of the WGMR non-cleared margin rules.

How We Helped

We have provided an outsourced end-to-end outreach and re-papering service encompassing assisting in the creation of CSA templates and related playbooks and then creating the first draft documentation. We then manage the negotiation stage of the process, facilitating the communication between in-scope counterparties and getting approval from all stakeholders for non-standard amendments and removing any barriers to negotiations.

Once the production and processing of the execution copies were completed and due diligence was undertaken on the signing authorities, we then began a post-completion update of core commercial data within legal and collateral management systems and delivered detailed VM and IM CSA training to internal legal and risk teams. This helped them in the negotiation of relevant documentation once it has been brought back in-house as business-as-usual.

Results

Example 1

To date we have managed the negotiation of over 3,000 VM and IM CSAs and, in doing so, we have consistently outperformed the market by reference to reported completion rates.

Example 2

For Variation Margin, we achieved an average completion rate of 76% by the 1 March 2017 deadline (with the best result of 99%) against a reported industry average of 42%.

Example 3

For Initial Margin, so far we have achieved an average completion rate of 90% by the Phase 1.5 and Phase 2 deadlines (with the best result of 92%) against a reported industry average of 56%.

Impact

Our clients have benefited from far higher than average levels of timely compliance resulting in a reduction of regulatory risk coupled with the financial benefit of lower incidences of disruption to trading relationships.

We have achieved this whilst, at the same time, delivering savings of up to 80% when measured against the costs of other consultancies or external law firms.

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