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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 The {{imcsd}} proposes three ways of solving this:
-*'''Distinct Margin Flow Approach''': you pay IM under the {{imcsd}} and pay the whole IA whack, separately, to the counterparty under the {{imcsdprov|Other CSA}}. Obviously enough, customers are not going to like this.
+*'''[[Distinct Margin Flow (IM) Approach - IM CSD Provision|Distinct Margin Flow Approach]]''': you pay IM under the {{imcsd}} and pay the whole IA whack, separately, to the counterparty under the {{imcsdprov|Other CSA}}. Obviously enough, customers are not going to like this.
-*'''Allocated Margin Flow Approach''': you pay the Reg IM portion of the IA under the {{imcsd}}, and pay any excess over that in the IA to the counterparty under the {{imcsdprov|Other CSA}}. To the JC’s way of thinking, this is the only one that makes any sense;
+*'''[[Allocated Margin Flow (IM/IA) Approach - IM CSD Provision|Allocated Margin Flow Approach]]''': you pay the Reg IM portion of the IA under the {{imcsd}}, and pay any excess over that in the IA to the counterparty under the {{imcsdprov|Other CSA}}. To the JC’s way of thinking, this is the only one that makes any sense;
-*'''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.
+*'''[[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.
+In a nutshell, we think that almost all punters will go for the [[Allocated Margin Flow (IM/IA) Approach - IM CSD Provision|Allocated Margin Flow]] approach: 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.
+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.