Template:M summ 2018 CSD 3(c)

“... a posting obligation of a Chargor, the Base Currency Equivalent of an amount equal to the sum of the Independent Amounts (as defined in any Other CSA) applicable to the Chargor and any other amounts applicable to the Chargor (other than any amounts in respect of Margin Amount (IM) or Exposure), however described, intended by the parties to operate as an Independent Amount ...”

This is the organisation that wants to standardise all financial products across the market, readers.

What a world we live in.

There are three approaches to regulatory initial margin, all of whom address the problem of how to play it when the amount your regulator says you have to take as initial margin differs from the amount you, in your infinite wisdom, were going to take anyway. The three was are:

• The Distinct Margin Flow (IM) Approach, under which you basically double-count: the customer pays whatever is required for regulatory IM to the custodian, and pays, in full, whatever the dealer requires for initial margin, to the dealer.
• The Allocated Margin Flow (IM/IA) Approach, under which you split it: the customer pays whatever is required for regulatory IM to the custodian, and pays, any excess over that that the dealer requires for initial margin, to the dealer.
• The Greater of Margin Flow (IM/IA) Approach, under which you pay everything to the custodian: the customer pays whatever is required for regulatory IM to the custodian together with any excess over that that the dealer requires for initial margin: the dealer doesn’t get delivered anything.

The middle option is the sensible one: no customer with a heart and ears would dream of paying IM twice; no dealer would contemplate having non-regulatory IM held by a third party where it cannot get funding benefit from it.