SGX partners with Cassini Systems ahead of UMR
26 August 2020 Singapore
Image: fotogestoeber / Shutterstock.com
The Singapore Exchange (SGX) and Cassini Systems, a provider of pre- and post-trade margin and collateral analytics for derivatives markets, have partnered to provide a free service for market participants to prepare them for the Uncleared Margin Rules (UMR) requirements.
SGX aims to leverage Cassini’s domain expertise to provide market users with complimentary analysis to determine their average aggregate notional amount (AANA).
The AANA represents the gross value of open, non-centrally cleared derivatives positions, international regulators use the AANA to determine whether a firm falls in scope for each phase of UMR.
Phases five and six of UMR will come into effect in September 2021 and 2022 respectively.
By September 2022, more than a thousand firms will be impacted by UMR, says SGX’s head of FX KC Lam who explains that for this reason “it is important to start planning now”.
In-scope entities are subject to a mandatory exchange of initial margin (IM) with their counterparties for their bilateral over-the-counter (OTC) agreements of more than the $50 million IM threshold per counterpart.
SGX and Cassini are offering the service in advance so firms potentially meeting the $50 billion AANA threshold can take steps now to assess their status, adjust their positions and look for alternatives to certain non-cleared products.
The partners also confirmed they plan on educating and raising awareness among market participants on the process for complying with UMR, through webinars in the coming months.
Liam Huxley, CEO and founder of Cassini, explains: “Those firms that conceivably could fall in scope for phase five should immediately begin efforts to understand their AANA and strategise on how they might identify opportunities to re-allocate their portfolio, reduce their margin obligations to potentially achieve substantial cost savings and delay falling in scope while still meeting their trading goals.”
He adds that “if they wait until it’s time to report the information to the regulator, it’s often too late to make these adjustments”.
Elsewhere, earlier this year Cassini announced the establishment of its first physical Asia Pacific presence with the opening of an office in Sydney and plans to grow its client base in the region.
SGX aims to leverage Cassini’s domain expertise to provide market users with complimentary analysis to determine their average aggregate notional amount (AANA).
The AANA represents the gross value of open, non-centrally cleared derivatives positions, international regulators use the AANA to determine whether a firm falls in scope for each phase of UMR.
Phases five and six of UMR will come into effect in September 2021 and 2022 respectively.
By September 2022, more than a thousand firms will be impacted by UMR, says SGX’s head of FX KC Lam who explains that for this reason “it is important to start planning now”.
In-scope entities are subject to a mandatory exchange of initial margin (IM) with their counterparties for their bilateral over-the-counter (OTC) agreements of more than the $50 million IM threshold per counterpart.
SGX and Cassini are offering the service in advance so firms potentially meeting the $50 billion AANA threshold can take steps now to assess their status, adjust their positions and look for alternatives to certain non-cleared products.
The partners also confirmed they plan on educating and raising awareness among market participants on the process for complying with UMR, through webinars in the coming months.
Liam Huxley, CEO and founder of Cassini, explains: “Those firms that conceivably could fall in scope for phase five should immediately begin efforts to understand their AANA and strategise on how they might identify opportunities to re-allocate their portfolio, reduce their margin obligations to potentially achieve substantial cost savings and delay falling in scope while still meeting their trading goals.”
He adds that “if they wait until it’s time to report the information to the regulator, it’s often too late to make these adjustments”.
Elsewhere, earlier this year Cassini announced the establishment of its first physical Asia Pacific presence with the opening of an office in Sydney and plans to grow its client base in the region.
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