In an FTF Exchange podcast, Neil Murphy, business manager at TriOptima, talks about the many tasks ahead for the business units within a trading firm in scope for UMR deadlines.
At a high level, Neil Murphy, business manager at TriOptima, says in the latest FTF Exchange podcast that the key challenges for compliance with the Uncleared Margin Rules (UMR) deadlines can be summarized as all relating to the high volumes of required tasks and the number of firms coming into scope for these regulations.
In addition to the many tasks involved, UMR requires many parts of the firm to get involved: trading, risk, technology, legal, and operations, Murphy says. In general, UMR compliance is a 12-month challenge, he adds.
“In terms of the volumes of firms, across the earlier four [UMR] phases since 2016 we’ve seen only about 70 to 75 firms come into scope,” Murphy says. “However, in contrast, we expect more than 300 maybe in September 2021, and upwards of 600 in September 2022. So, this volume creates its own set of challenges as firms compete for resources at the same time whether that’s custodians, counterparties, vendors, or consultants.”
The podcast also covers some of the key steps involved in the following:
- Average aggregate notional amount (AANA) calculation;
- Figuring out a firm’s collateral processing needs;
- How firms should continue to monitor their progress;
- How much progress has the industry made as far as UMR Phase 5 and Phase 6;
- And how should firms prioritize their efforts and resources.