CloudMargin, creator of the world’s first collateral and margin management solution native to the cloud, and Margin Tonic, a service provider specialising in the collateral and post-trade domains, have joined forces to launch a global calculation service for the latter phases of the Uncleared Margin Rules (UMR).
The solution combines CloudMargin’s technology with Margin Tonic’s regulatory consultancy services.
The joint subscription service automates the AANA calculation for clients on the CloudMargin platform, leveraging Margin Tonic’s expertise in the multi-jurisdictional UMR and helping clients to fine-tune fit-for-purpose trading and compliance strategies.
Firms brought into scope for Phase 5 of UMR – based on their AANA calculations for March, April and May of 2021 – were required to begin exchanging Initial Margin (IM) from 1 September for trading of non-cleared over the counter (OTC) derivatives.
A much larger group – estimated at almost 800 mainly buyside firms by the International Swaps and Derivatives Association (ISDA) – is expected to fall into scope for Phase 6, which takes effect on 1 September 2022.
This follows AANA calculations conducted in March through May of the same year for most jurisdictions.
However, even for those firms under the $8 bn (€8bn) threshold and not in scope for Phase 6, there is a regulatory need to perform ongoing year-on-year AANA calculations to assess if they will join the fray any year after September 2022.
AANA calculation rules can be complex, with product scope and calculation methods varying by jurisdiction.
Firms also often encounter AANA challenges such as consolidation of data from multiple trade sources, lack of AANA regulatory guidance and unclear treatment of funds, including multi-manager funds.
“Calculating AANA is the first step toward determining if an institution is in scope for UMR,” says Simon Millington, head of business development at CloudMargin. “Many firms don’t realise that they’ll need to maintain these AANA calculations on an ongoing basis, whether or not they fall into scope for Phase 6.
He adds, “This service offers clients a heightened level of confidence and comfort that they have industry-leading expertise analysing the various nuances of regulatory jurisdictions and complex factors, combined with a robust technology solution providing accurate AANA calculations they can track over time with automated reporting.”
Chris Watts, Co-Founder of Margin Tonic, says. “Having early and ongoing clarity on AANA status ensures that firms can prepare for compliance with confidence, for the heavy front-to-back changes. Too often, we have seen firms perform AANA calculations too late, or not regularly enough, causing a rush to compliance with unfit solutions and high compliance risk, with the potential to impact their ability to trade.”
©Markets Media Europe 2021