AcadiaSoft and TriOptima predict that nearly a quarter of all 250 firms in scope for phase five of the Uncleared Margin Rules (UMR) will be using signed up to their initial margin (IM) product by the end of the year.
The UMR IM requirements seek to establish international standards for non-centrally cleared derivatives. Asset managers, pension funds and insurance companies are scheduled to come in-scope of UMR based on their volume thresholds either with phase five on 1 September 2021 or phase six on 1 September 2022.
The partners confirm that 32 firms are already on board for the soft launch which began on 1 September and will run until 31 August 2021 and is aimed at avoiding a “compliance crunch” nearer the phase five go-live.
They say that more than 25 additional firms are scheduled to join before the end of 2020. The soft launch enables firms that are in-scope for the final two phases of the UMR to monitor their regulatory IM exposure in advance of becoming operationally ready to move margin.
It also allows them to have IM CSAs or custody accounts in place to test the Initial Margin Exposure Manager (IMEM) before going live, AcadiaSoft states.
When the one-year delay to UMR was confirmed in April, as a consequence of the COVID-19 induced market disruption, firms were still keen to maintain the momentum they had gained in achieving compliance given the uncertainty heading into 2021, explains Mark Demo, head of community development at AcadiaSoft.
“The soft launch initiative we’ve built with TriOptima will allow firms to build on the progress made thus far and ensure they are equipped to move margin as soon as they are in-scope,” he says.
Nationwide Building Society senior treasury operations manager Jill Harvey says participating in the soft launch allows her firm “get a view on our IM exposure and how the new process works”, which will make next year’s go live a smoother process.
Mary Harris, head of triResolve business management, North America, at TriOptima, states: “Having worked with AcadiaSoft to develop and maintain the Initial Margin Exposure Manager (IMEM), we are delighted to collaborate with them again to introduce Initial Margin Threshold Monitor, which enables free testing of IMEM for UMR phase five and six firms until 1 September 2021.”
“When the one-year delay was announced, we heard from many in-scope firms that did not want to delay their IM compliance projects given the progress they had already made internally and the continued uncertainty heading into 2021,” says Mark Demo, head of community development at AcadiaSoft.
Earlier this year, TriOptima had also renewed its collaboration with AcadiaSoft to automate monthly collateral interest payments in order to improve the efficiency of trade processing for over-the-counter (OTC) market participants.
TriOptima says its expanded support for AcadiaSoft’s new interest payments messaging will allow the wider industry to benefit from increased efficiencies.
