In the run up to phase 6 of the Uncleared Margin Rule (UMR) going live this week, SIX Group has introduced a new Triparty Collateral Management (TCM) solution.
When using the TCM service, two parties to a transaction delegate their day-to-day operational responsibilities around collateralisation to SIX. This helps ensure the correct amount of margin is being posted and that risks are managed should volatility enter into the market and skew margin for posting.
The final phase of the six year roll out of UMR is expected to impact roughly 1,100 buy side firms..
The new solution will enable all requirements for opening, managing and closing collateral exposures to be managed in the Collateral CockpitTM service that has been used for its repo services since June 2020.
SIX says that the new solution will complement its existing triparty agent solution with enhanced triparty collateral management functions offered through the TCM service.
The use of the Collateral CockpitTM in combination with TCM will allow the monitoring of exposures and margin calls in real-time and simplifies processes in collateral management such as substitutions.
The solution also offers a direct link to the major margin calculation agents & margin transfer utilities.
“With this solution combined with our sophisticated Collateral CockpitTM, we provide a higher level of security, control and useability for our clients,” says Nerin Demir, SIX’s head of repo and collateral management.
He adds, “In addition, we established the backbone for collateral mobilisation, enabling many new use cases for our collateral management service and a foundation for future growth.”
SIX’s head of sales for repo and collateral management, Christian Geiger, notes, “Triparty collateral arrangements are especially important for the UMR. SIX has seen an increasing client demand with the final phase of UMR coming into force this September.
“Several clients are already using our user-friendly service that also offers a direct link to the major margin calculation agents and margin transfer utilities, allowing them to leverage existing connections. The service is backed by an International Securities and Derivatives Association (ISDA) reviewed custodian documentation.”
