More than 1,000 banks, broker-dealers, asset managers, hedge funds, insurance companies, energy companies and other firms will become subject to Unclear Margin Rules (UMR) in the next phase of implementation in 2022. Many of those entities will partner with CRISIL for compliance support.
The UMR was created by regulators to reduce the systemic risk of derivatives that manifested itself during the Global Financial Crisis. The implementation of UMR represents one of the most significant changes in market history. It will transform the way derivatives counterparties calculate initial margin (IM) for non-centrally cleared derivatives by adopting a risk-based IM calculations paradigm and a bi-lateral collateral exchange mechanism.
CRISIL has extensive experience in providing UMR-related services the financial entities covered by the rules in implementation Phases 1-4. As a result, our team is well-positioned to advise Phase 5-6 clients on UMR compliance. Our comprehensive support includes covers all elements of compliance, from educating stakeholders to designing UMR compliant bespoke CSAs/ACAs, AANA calculations, SIMM model implementation, risk system changes, documentation, and governance processes.
