13 June 2017
As of January 3rd 2018 FX forwards will need to be collateralised under the European margin rules.
We have created a brief Q&A which highlights the key components of the regulation, what it means for your firm and how you can achieve compliance.
What does this mean for the market?
What are the key components of the regulation?
European non-cleared margin requirements cited the classification of an FX spot transaction in MiFID II as an important precursor to the inclusion of FX forwards in the rules. With the classification complete and the go live of MiFID II set for January 3rd 2018, all FX forwards will subsequently need to be collateralised.
I’ve never had to exchange collateral before, what does this mean for me?
Why the large increase in margin call volumes? And what does that mean for the market?
I’m not in Europe but my counterparties are, what does this mean for me?
You are indirectly affected by the rules if you trade FX forwards with a European counterparty. All new FX forward trades that you do with your European counterparties will have to be margined according to the rules from January 3rd 2018.
Now I know the challenges, how can I make light of them?
If you are looking to put a collateral management process in place for the first time, look for a solution that is quick to implement and allows you to optimise your operational resources.
Firms that will see an increase in margin call volume and amount of counterparties in scope need a scalable and exception-based collateral management solution. Bringing processes together and focusing on exceptions through automation will enable you to direct your resource where it matters – on risk and compliance.
triResolve Margin was recently voted the market leading collateral management solution by the industry. Low cost, easy to implement and highly automated, triResolve Margin is unique in its ability to assist firms in overcoming the challenges presented above. Please get in touch if you wish to request a demo or discuss your specific requirements.