Initial margin fears are realised 09 October 2013London Reporter: Georgina Lavers
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A recent paper has explored the regulatory drivers for the implementation of initial margin and the challenges that institutions face from a systems, organisational and modelling perspective.
InteDelta, a risk management consultancy, has collaborated with BNP Paribas Íø±¬³Ô¹Ï Services, Lombard Risk and TMX Technologies to produce the whitepaper, titled 'Initial Margin: a commentary on issues for centrally cleared and non-centrally cleared business'. The paper will be released at Fleming Europe 7th annual collateral management forum in Amsterdam.
David Beatrix, business development, market and financing services for BNP Paribas Íø±¬³Ô¹Ï Services, said: "The new rules and practices in relation to initial margins of cleared and bilateral OTCs impose new requirements to financial institutions, both in terms of liquidity and asset protection. As a leading custodian, we continuously develop solutions to help our clients to meet these challenges, keeping a constant focus on risk management."
Michael Bryant, the managing director of InteDelta, added that the introduction of mandatory initial margin requirements is going to have a major impact on institutions for both cleared and non-cleared business.
"Institutions will need to respond by adapting their organisational structure and processes and ensuring they have in place adequate systems, methodologies and policies."
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