Template:M summ 2018 CSD 3(c): Difference between revisions

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 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 '''{{imcsdprov|Distinct Margin Flow (IM) Approach}}''', under which you basically double-count: the customer pays whatever is required for [[regulatory IM]] to the [[Custodian (IM) - IM CSD Provision|custodian]], and pays, in full, whatever the [[dealer]] requires for initial margin, to the [[dealer]].
+*The '''{{imcsdprov|Allocated Margin Flow (IM/IA) Approach}}''', under which you split it: the customer pays whatever is required for [[regulatory IM]] to the [[Custodian (IM) - IM CSD Provision|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 (IM) - IM CSD Provision|custodian]]: the customer pays whatever is required for [[regulatory IM]] to the [[Custodian (IM) - IM CSD Provision|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.