IHS Markit, a data and solutions provider, and OpenGamma, a margin optimisation firm, have joined forces to help mutual clients reduce the cost of margin management under the Uncleared Margin Rules (UMR).
The offering will combine OpenGamma’s pre-trade margin analytics with IHS Markit’s post-trade derivatives calculation service, providing end-to-end support for in-scope entities.
According to IHS Markit, the post-trade calculations, which are part of its portfolio valuations business, cover complex and exotic products, as well as credit default swap (CDS) pricing and bank consensus data for illiquid derivatives. OpenGamma’s margin analytics are for cleared and bilateral derivatives.
The collaboration follows the decision by the Basel Committee on Banking Supervision (BCBS) and the International Organisation of Securities Commissions (IOSCO) to delay phases five and six of margin requirements for non-centrally cleared derivatives by one year.
The final phases of UMR were originally scheduled for September 2021 and September 2022 respectively, with an estimated 1,000 plus firms – predominantly funds and institutional investors – to be subject to the bilateral exchange of initial margin. For many, it will be the first time that they will have to deal with collateral management, IM reconciliation and margin calls as well as legal documentation.
“Together with OpenGamma, we are excited to help firms achieve regulatory compliance and a competitive edge through margin validation and optimisation,” Hiroshi Tanase, executive director at IHS Markit, adding that the solution which is “powered by highly-accurate margin analytics and calculations, can effectively streamline margin workflows and over the counter derivatives trading to enable cost mitigation.”
Peter Rippon, CEO of OpenGamma, noted, “Asset managers are currently working out how to best use the time afforded to them by the UMR delay. Many firms are underestimating the complexity involved in pricing bilateral derivatives. Together, our combined solution offers full coverage for both cleared and bilateral derivatives.”
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