collateral

Introduction When I started in securities custody there were no specific laws or rules about it, few regulators knew what it was, accounts were opened for new clients on the strength of a telex request and contracts to look at as precedents, if there were any at all, were two, perhaps as many as six […]

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On 6 November 2014, ISDA released the 2014 “Standard” Credit Support Annex, available as always under English law or New York law. This new CSA is meant to coexist with the legacy 1994 CSA and the already out-of-fashion 2013 CSA published only a year ago. What was presented as a tour de force in the […]

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On 6 November 2013, the CFTC published the final rules on the protection of collateral of counterparties to uncleared swaps (17 CFR Parts 23 and 190) on their webpage.  The rules require that a swap dealer or major swap participant must in accordance with §23.701: Notify each counterparty to the transaction that they have the […]

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A short article in Risk magazine details a new practice amongst some of the larger swap dealers, of posting so-illiquid-as-to-be-solid assets as initial margin; Risk quotes the banks involved as putting “lazy” assets to work. Banks sign bilateral agreements with each other, arranging to post a static portfolio of assets to a third-party account. The […]

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IOSCO has presented its Risk Outlook, the first of an annual series.  The 84 page report aims to highlight important systemic risks and trends in the global securities market. In an admirable example of management-speak compression, IOSCO chairman Greg  Medcraft  said of the report “I see it as a great example of IOSCO being proactive, […]

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Despite industry hand-wringing and earlier indications of flexibility, the CFTC yesterday signalled that it sees little prospect of relaxing its long-standing proposed margin rules.  Current practice allows a broker to use one client’s excess margin to cover the shortfall in another’s, allowing clients up to three days to meet a margin call. The proposed rule […]

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May 10th, 2013 by Michael Beaton Tags:

Half of buy-side firms still not ready for swap rules | news | Asset Classes | Derivatives | thetradenews.com. Although it only provides supporting evidence to a conclusion which will surprise nobody, here is a brief article regarding industry readiness for the impact of Dodd-Frank and EMIR on collateralisation processes within buy-side firms.  

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Any hopes of seeing a global standard with respect to the margining of non-cleared derivatives in the near future seem to have been dashed. Risk reports that the group tasked with drafting the rules, the Working Group on Margining Requirements (a joint working group of the Basel Committee on Banking Supervision and the International Organization […]

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Risk Magazine is reporting that the European Securities and Markets Authority (ESMA) has confirmed that OTC derivatives trades executed before the relevant EMIR regulatory technical standards come into force will not be subject to rules regarding the posting of initial margin. Article 11(3) of EMIR requires financial counterparty to have procedures in place governing the […]

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On 31 July 2012, in accordance with Article 46(3) of EMIR, the European Systemic Risk Board (“ESRB”) submitted advice to the European Securities and Markets Authority (“ESMA”) regarding: the type of eligible collateral that can be considered highly liquid; the haircuts to apply to asset values; and the conditions under which commercial bank guarantees may […]

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