Buy and sell sides united on margin calculations
24 June 2014 London
Image: Shutterstock
InterDelta has revealed the preliminary findings from research on industry planning for the forthcoming non-cleared margin regulation for over the counter (OTC) derivatives.
One finding suggests that both buy- and sell-side financial firms feel they will ultimately by required to calculate and exchange initial margin on non-cleared OTC trades.
This comes despite the fact that current regulations only mandate this for firms with outstanding OTC derivative notional amounts greater than €3 trillion for 2015 and with a phase down to €8 billion for 2019.
Out of 80 market participants in the survey, 62 percent of buy-side firms currently prefer to use the standard regulatory initial margin schedule. In contrast, 63 percent of sell-side firms surveyed prefer an industry wide internal model, with the regulatory schedule the least favoured option.
Despite the differing of opinions, both sides preferred to use an industry standard margin calculation utility if initial margin models were to be implemented.
The full survey is due to be published in mid-July.
One finding suggests that both buy- and sell-side financial firms feel they will ultimately by required to calculate and exchange initial margin on non-cleared OTC trades.
This comes despite the fact that current regulations only mandate this for firms with outstanding OTC derivative notional amounts greater than €3 trillion for 2015 and with a phase down to €8 billion for 2019.
Out of 80 market participants in the survey, 62 percent of buy-side firms currently prefer to use the standard regulatory initial margin schedule. In contrast, 63 percent of sell-side firms surveyed prefer an industry wide internal model, with the regulatory schedule the least favoured option.
Despite the differing of opinions, both sides preferred to use an industry standard margin calculation utility if initial margin models were to be implemented.
The full survey is due to be published in mid-July.
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