Uncleared margin regulation

From The Jolly Contrarian
Jump to navigation Jump to search

Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you.
Sign up for our newsletter.

Fonly known as “UMR”, or “SIMM”, or Reg Margin, among other cloying appellations, margin requirements for uncleared derivatives aim to reduce counterparty credit risk and encourage clearing of derivatives through price incentives.

The new rules require the bilateral exchange of initial margin (IM) and variation margin (VM), and apply to financial firms and systemically important non-financial entities. EMIR appears to apply to all non-EU non-financial entities, whereas EU corporates are only within scope if they exceed the EMIR clearing threshold.