The many rules, regulations and deadlines of the Uncleared Margin Rules (UMR) reforms are hitting home for many securities firms and causing them to make certain they are doing everything they can for their clients that are in scope.
“I think that’s a really interesting question because I think the term ‘client’ can be used in multiple dimensions, right,” says Diana Shapiro, director and North American head of collateral services for Citi, during her video interview with FTF News.
The interview took place during FTF’s CMD Ops 2019 conference and exhibition on Nov. 20, 2019.
“So, if you think about uncleared margin rules, the swap dealers are major participants who have already come into scope,” Shapiro says. “The clients are their counterparties. So, I think they’re reaching out to them to start documentation. There’s a lot of education going on in terms of what it is that they need from their counterparts in order to ensure that they remain compliant.”
Custodians and service providers also have large numbers of clients affected by Phases 5 and 6. “So, for them they’re thinking about how you handle the capacity of … new accounts and new mandates to provide service,” Shapiro says.
For asset managers, they thinking their clients are the funds that they oversee, Shapiro adds.
“So, for them, one, is their education down to their clients. But it’s also trying to understand which of the of funds are actually impacted. So, there’s a data challenge there that’s specific to the asset management space where,” Shapiro says.
For instance, separately managed accounts [SMAs] are managed by multiple asset managers “and each of them knows only a piece of the puzzle,” Shapiro says.
“So, when they’re thinking about the AANA [Average Aggregate Notional Amount] count that brings them into scope and they’re thinking about thresholds that define when they have to post IM — that’s shared against asset managers. So, they really need to get that information of in scope or not from the underlying clients. There’s definitely an information exchange that needs to occur.”
At CMD, Shapiro tool part in the “The Right Determination” panel discussion, which focused on what buy-side firms and other industry participants must do to determine whether they fall into the Phase 5 or the recent Phase 6 grouping of the UMR rules and deadlines.
Click on the image above to see the full interview.
CREDITS:
Videographer and video Editor: Janene Knox
Interview conducted by Eugene Grygo, chief content officer, FTF News
Co-Producers: Sarah Hathaway, vice president, Financial Technologies Forum (FTF) and Eugene Grygo
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