Following the first four phases of the Uncleared Margin Rules (UMR) for OTC Derivatives and the delays and disruption felt in 2020 due to COVID-19, it’s becoming increasingly clear how the regulations will start to impact a vast and varied population of market participants. This includes large institutional investors such as hedge funds, insurance companies, pension funds and corporates etc.

Implementing UMR not only puts a strain on legal teams, operations and fund administrators already stretched and overrun by overlapping regulations. It also adds commercial and reputational risk since trading can’t continue until firms have proved the data is fully operational. 

We’re ready for these key challenges and here’s how we can help you solve them.

Key challenges 

  • Phase 5 and 6 introduces a large number of buy side firms, some of whom may have limited resources (legal and data). This will also greatly increase the data challenge – the consolidation of fund threshold amounts across multiple dealers being just one issue.
  • During the hand-off from the negotiators to data operations, firms will need to manage data arriving in a variety of formats (PDF, Doc Gen feed etc.) as well as ensuring agreement data correlates to the correct counterparty relationship.
  • There are now a range of utilised options for negotiation, institutions that negotiate outside of the standard “playbook” will quickly erode any benefit provided and there will still be a need to extract the underlying data to feed internal systems.
  • Lack of consistency between industry data models and inconsistent data flows from negotiation providers.
  • Lack of detailed information and context in existing developed data models leading to a lack of confidence in the data extracted. 
  • No relationship between the collateral data and the legal text held in the document, make it a costly exercise to resolve disputes.
  • Mining useful data from Collateral Schedules that can be directly fed into a collateral system..

Contact us to find out how we are addressing these challenges.