ISDA’s ‘next generation’ versions of the Reg IM documentation set out three different options for managing the combination of IA and Reg IM, in the ‘margin flow approach’:
Distinct (IM) approach
Greater of (IM/IA) approach
Allocated (IM/IA) approach
Each comes with different levels of system and operational complexity and, crucially, a requirement for different amounts of collateral to be posted.
Alan Sheehan of Calypso Technology explores the three different options.
Calypso Technology, Inc. is a cloud-enabled provider of cross-asset front-to-back solutions for financial markets with over 35,000 users in 60+ countries. Its award-winning software improves reliability, adaptability, and scalability across several verticals, including capital markets, investment management, central banking, clearing, treasury, liquidity, and collateral. Calypso is pioneering innovative technologies (native cloud technology, AI, Big data) that reimagine capital markets.