Template:M intro csa (VM): Difference between revisions

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 Said truculent child did as truculent children do: instead of accepting its punishment with good grace, understanding it has erred, and treating the whole incident as a teachable moment, it did its best to work around it. Swap transactions that were already on foot before the commencement of the new regulations were “[[grandfathered]]” and were not, specifically, required to be margined. Certain classes of transaction — not many, in the end — were out of scope for compulsory margin. So the industry prepared for a world where single {{isdama}} might have ''two'' CSAs: a regulatory one for in-scope products after the commencement date, and a non-regulatory one for grandfathered products and those out of scope after the commencement date.
-What is the difference between regulatory and non-regulatory margin CSAs? Largely one of theory and not practice: a plain old [[Ancient CSA]] has a wide range of {{{{{1}}}|Eligible Credit Support}}, presumes you may set an {{{{{1}}}|Independent Amount}} (this is ISDAs traditional way of dealing with initial margin), and allows the parties to agree {{{{{1}}}|Valuation Date}}s more or less as they see fit and set often asymmetrical {{{{{1}}}|Thresholds}}, {{{{{1}}}|Minimum Transfer Amount}}s.
+What is the difference between regulatory and non-regulatory margin CSAs? Largely one of theory and not practice: a plain old [[Ancient CSA]] has a wide range of {{vmcsaprov|Eligible Credit Support}}, presumes you may set an {{vmcsaprov|Independent Amount}} (this is ISDAs traditional way of dealing with initial margin), and allows the parties to agree {{vmcsaprov|Valuation Date}}s more or less as they see fit and set often asymmetrical {{vmcsaprov|Thresholds}}, {{vmcsaprov|Minimum Transfer Amount}}s.
-The new VM CSAs (and more importantly, the regulations with which they were designed to comply) assume each Local Business Day would be a {{{{{1}}}|Valuation Date}} each day, that your {{{{{1}}}|Threshold}}s will be zero, and that {{{{{1}}}|Eligible Credit Support}} will take the form of {{{{{1}}}|Cash}} in the {{{{{1}}}|Base Currency}}.
+The new VM CSAs (and more importantly, the regulations with which they were designed to comply) assume each Local Business Day would be a {{vmcsaprov|Valuation Date}} each day, that your {{vmcsaprov|Threshold}}s will be zero, and that {{vmcsaprov|Eligible Credit Support}} will take the form of {{vmcsaprov|Cash}} in the {{vmcsaprov|Base Currency}}.
 Now, in practice, old-style CSAs had in practice been converging on standard terms that were not so different from what the regulation required. Most were valued daily, with low Thresholds, and in cash. There might have been some advantages and balance-sheet efficiencies to be had from sticking to ''l’ancien regime'', but they were not as stark in practice as they look in theory.
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 You can imagine this could become very difficult for the poor bugger in ops that is handling two sets of collateral flows across 25,000 ISDA arrangements.
-{{icds}} elegant solution was to suffix the regulatory margin versions of these terms — what we call the “[[Modern CSA]]s” with “(VM)”. Result: a lot of (VM)s. ISDA’s prose in the CSAs — especially the [[Modern CSA]]s — is purple enough without these ugly parentheticals.
+{{icds}}’s elegant solution was to suffix the [[regulatory margin]] versions of these terms — what we call the “[[Modern CSA]]s” with “(VM)”. Result: a lot of (VM)s. ISDA’s prose in the CSAs — especially the [[Modern CSA]]s — is purple enough without these ugly parentheticals.
-But needed, right? Are we now in a world of parallel CSAs, carefully arbing the
+But needed, right? Are we now in a world of parallel CSAs, carefully arbing the regulatory rules? It is difficult to know definitively — {{isdama}}s are private contracts — but anecdotally, it seems not. Almost all of the “[[grandfathered]]” legacy business would have rolled off or rolled into in-scope Transactions quickly after the effective date for the regulations. Seeing as almost all products were in scope for the regulations, it seems unlikely that many parties would have stuck with an Other CSA for a tiny portion of their FX trading businesses. We are not saying none — but leaving these fossil remnants of a brief transitionary period in these documents feels a regrettable step.