AcadiaSoft, a provider of risk and collateral management services for the non-cleared derivatives community, has announced an industry-wide soft launch to help Phase 5 firms stay on track for Uncleared Margin Rules (UMR) compliance ahead of the extended 2021 deadline.The program is designed to enable Phase 5 firms to continue on their current development timelines for Initial Margin (IM) exposure calculation and testing in a no pressure and low cost manner. Phase 5 firms with the ability to calculate IM exposure can participate in a “mock” go-live on the original Phase 5 deadline of 1 September, 2020 for the duration of the soft launch period of 1 September, 2020 through August 31st, 2021 . This will allow Phase 5 firms who can calculate regulatory IM to compare IM exposure and reconcile it versus participating Phase 1-4 dealers .
“We are working closely with many Phase 5 firms that have already made significant strides towards compliance and do not want to lose any momentum,” says AcadiaSoft CEO Chris Walsh. “The soft launch will ensure that these firms stay on track for the new deadline, while allowing firms that may be approaching the threshold to monitor initial margin exposure. We are grateful to the firms already in-scope for the rules that have agreed to support this testing program as the industry prepares for the largest phase of the uncleared margin rules.”
“This is really a story of market participants coming together to support a responsible way for self-selecting firms who don’t want to delay their compliance projects. These firms have budget and project resources allocated today which may not be there a year from now. If every Phase 5 in-scope firm dropped their pens and picked them back up a year from now – we’d have the same rush towards compliance this time next year” said Mark Demo, Head of Community Development.
Participating firms will not need to have negotiated a regulatory IM CSA between them but instead can create a regulatory IM monitoring relationship between parties in AcadiaSoft’s Agreement Manager and can use the soft launch to get a clear picture of where they should negotiate regulatory IM CSAs and establish custody accounts and where they don’t need to to because they’ll be below the 50MM Reg IM Threshold.
Phase 5 firms that do not currently have the resources to calculate or reconcile IM exposure can gain free access to AcadiaSoft’s IM Threshold Monitor to review projected IM exposure as calculated by their participating dealers and gauge when they may reach the 50 million IM threshold. All of these capabilities will give firms an opportunity to reduce regulatory IM exposure ahead of their official go-live date of 1 September, 2021.
