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Template:Csa Margin Amount and Approach summ: Difference between revisions
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====Allocated Margin Flow is the best bet==== | ====Allocated Margin Flow is the best bet==== | ||
To follow the contorted logic here you have to keep in mind that the {{imcsdprov|Credit Support Amount (IM)}} comprises the {{imcsdprov|Margin Amount (IM)}} — being the amount actually required as [[regulatory initial margin]] under the relevant regulatory regime by the counterparty in question, and the {{imcsdprov|Margin Amount (IA)}}, which is any ''extra'' [[initial margin]] — what in the old days we used to call an “{{csaprov|Independent Amount}}” | |||
We think that almost all punters will go for the [[Allocated Margin Flow (IM/IA) Approach - IM CSD Provision|Allocated Margin Flow]] approach as this best deals with the regulatory obligation without ''unduly'' penalising either side or changing the basic economics — though where the {{imcsdprov|Secured Party}} would otherwise be in the [[Rehypothecation|rehypothecation]] game, it ''does'' change the economics ''a bit'' — thus, render unto CESR what is required by CESR;<ref>This was ALMOST an awesome pun. It doesn’t ''quite'' work, seeing as (a) the [[Committee of European Securities Regulators]] was formally disestablished in 2011 and replaced by [[ESMA]]; and (b) you render your Reg IM unto a custodian, not to ESMA (or CESR) anyway. But still, it was close enough to roll the dice on it anyway Hope you like it.</ref> pay any excess over that to your counterparty. | We think that almost all punters will go for the [[Allocated Margin Flow (IM/IA) Approach - IM CSD Provision|Allocated Margin Flow]] approach as this best deals with the regulatory obligation without ''unduly'' penalising either side or changing the basic economics — though where the {{imcsdprov|Secured Party}} would otherwise be in the [[Rehypothecation|rehypothecation]] game, it ''does'' change the economics ''a bit'' — thus, render unto CESR what is required by CESR;<ref>This was ALMOST an awesome pun. It doesn’t ''quite'' work, seeing as (a) the [[Committee of European Securities Regulators]] was formally disestablished in 2011 and replaced by [[ESMA]]; and (b) you render your Reg IM unto a custodian, not to ESMA (or CESR) anyway. But still, it was close enough to roll the dice on it anyway Hope you like it.</ref> pay any excess over that to your counterparty. | ||
It leaves one rather arid and academic dispute that one may quickly tire of having, as to whether the excess should be over one’s {{imcsdprov|Credit Support Amount (IM)}} — being the amount one is ''obliged'' to post to the {{imcsdprov|Custodian (IM)}} by way of [[regulatory margin]] — or one’s {{imcsdprov|Posted Credit Support (IM)}} — being the amount one actually ''has'' posted to the {{imcsdprov|Custodian (IM)}} — these may be different if you are in the habit of operational laxity in providing Reg IM or reclaiming it when it is no longer required, or you have just blown up and missed a call — and we consider this further below. | It leaves one rather arid and academic dispute that one may quickly tire of having, as to whether the excess should be over one’s {{imcsdprov|Credit Support Amount (IM)}} — being the amount one is ''obliged'' to post to the {{imcsdprov|Custodian (IM)}} by way of [[regulatory margin]] — or one’s {{imcsdprov|Posted Credit Support (IM)}} — being the amount one actually ''has'' posted to the {{imcsdprov|Custodian (IM)}} — these may be different if you are in the habit of operational laxity in providing Reg IM or reclaiming it when it is no longer required, or you have just blown up and missed a call — and we consider this further below. | ||