The 'Wheel of Pain' highlights the key steps, risks, issues and pitfalls which need to be addressed
Early engagement with clients, vendors and custodians
Market impact and outcomes with regulators requirements
Central co-ordination to manage your group wide compliance delivery
Regulatory impact on role and BAU know-how for stakeholders
THE WHEEL OF PAIN
For firms impacted by UMR regulatory change needs to be solved over short period of time. This requires a fundamental re-design of your collateral management model to recalibrate, enhance and optimise your approach from the traditional credit mitigation role and springboard collateral as a key value driver for the firm.
Identify subjected products and trades, calculate your group AANA and formally self-disclose all impacted relationships to the industry.
Determine your trading partners, establish jurisdictional compliance and exchange responses for your bilateral margin requirements.
Complete an internal examination of the rules per jurisdiction, identify gaps, risks and create mitigation plans as part of self-attestation.
Negotiate and match eligible collateral schedules and utilise golden terms to drive processing.
Agree how to pledge Initial Margin through your custodian and onboard with your counterparty's agent. Negotiate, execute, test and configure internally and externally.
Determine the impact on collateral processing, settlement, reconciliations, connectivity to internal functions and the external collateral ECO system.
Operating model design and implementation to support new processes, increased volumes and the management of risk and compliance.
Understand the impact of collateral usage on your balance sheet, funding and liquidity metrics. Transform and mobilise collateral in support of P&L generation.
IM Model Governance
Determine the IM model and calculation approach. Develop, integrate and test all requirements including any backtesting, benchmarking, documentation, governance and validation.