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

Template:M summ 2018 CSD 3(c)(iii) (view source)

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 *'''[[Greater of Margin Flow (IM/IA) Approach - IM CSD Provision|Greater of Margin Flow Approach]]''': You pay the ''whole'' of the IA (or the IM, if it is greater) under the {{imcsd}} and ''nothing'' under the {{imcsdprov|Other CSA}}. We don’t think the broker will ever give up the right to reuse excess IA by steering that to a third party custodian, and nor, really should the client, since their implied financing rates will surely rise.
 ===[[Allocated Margin Flow (IM/IA) Approach - IM CSD Provision|Allocated Margin Flow]] is the best bet===
-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 — where one side is a [[Rehypothecation|rehypothecating]] [[prime broker]] it ''does'' change the economics ''a bit'' — render unto CESR what is due to 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. {{hawf}}</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. {{hawf}}</ref> pay any excess over that to your counterparty.
 It leaves one rather arid and academical 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 ones {{imcsdprov|Posted Credit Support Amount (IM)}} — being the amount one actually ''has'' posted to the {{imcsdprov|Custodian (IM)}} and we consider this further below.