“The implications of SIMM on liquidity and funding”

27th June 2017


Tracey Adams of Lombard Risk examines examples of three challenges faced by market participants caught up on the first wave of SIMM.

To read the full article on Securities Lending Times, click here.

Summary

In September 2013, the Working Group on Margin Requirements (WGMR), a group mutually run by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO), issued a final margin policy framework for non-cleared, bilateral derivatives. A key component of the WGMR implementation programme is the Standard Initial Margin Model (SIMM) project, which is focused on developing a common initial margin methodology that can be used by market participants globally.

While the industry has talked conceptually around SIMM for the last three years (indeed, it has been a topic that has consumed conferences and forums), it has only been since 1 September 2016, when SIMM went live for the largest derivatives users, that it has really shaken institutions into action. So, in a world where we have become so used to the regulatory environment, to the point of fatigue, why has the International Swaps and Derivatives Association’s (ISDA) SIMM caused so much of a flutter? More importantly, why and how is SIMM encroaching onto the processes and capacity of the securities lending environment?

More information on Lombard Risk’s collateral management solution, COLLINE is available online here. 


Permission to reproduce this piece has been kindly granted by Securities Lending Times

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