VM CSA Anatomy
|2016 ISDA VM CSA Anatomy™|
The 2016 CSA generated at great expense by ISDA to deal with all the regulatory obligations to post and collect variation margin that have popped up around the world, like so many stable doors boinking emptily against their jambs while the ponies of financial ruin career wildly through the meadows of propriety.
Part of the point of regulatory compliance was to remove the concept of title-transfer Independent Amount (“IA” being ISDA-speak for “initial margin”). After all, title transfer IA rather strikes at the heart of the regulatory aspiration, namely to collateralise mark-to-market exposures, so that neither party carried significant credit exposure to the other.
But then everyone decided they quite liked their initial margin, as long as it wasn't *too* much. So ISDA prepared a version of the 2016 CSA which included the Independent Amounts they had so laboriously stripped out, only in a little paragraph buried in the schedule of elections (Para 11 or 13, depending on your edition).
Then ISDA decided not to publish it.
All this during the crescendo to the full-bore bunfight of repapering all the world's derivatives clients as a “seemingly immutable” pan-global regulatory deadline stood menacingly in the way like an unforgiving concrete wall to the sideways-sliding Morris Minor of the world’s derivatives documentation capacity.
- We’ll see