"UMR Wheel of Pain"

1. Self Disclosure
Officially communicate reg status and complete AANA calculation. Determine margining approach to VM / IM (threshold monitoring)

2. Client Engagement
Use the self-disclosure process to define the scope of clients to engage. Consider clearing, novations, compressions or ETD trading and margining.

3. Rule Distillation
Interpretation of rules and challenges. Best practice requires a line-by-line self-attestation with gap analysis, mitigation plans and risk procedures in place.

4. Legal Agreements
Negotiate bilateral documentation and match eligible collateral schedules, avoid basis risk and utilise clean golden sourced data.

5. Custodial Onboarding
Third-Party Custodian or Tri-Party Agent account set-up allocation. Onboarding includes KYC, AML, and meeting industry deadlines. Complete testing IM movements before going live.

6. Technology
Do you have the right technology solutions (cloud vs old tech)? Are you connected to the collaborative ecosystem of vendors, utilities, exchanges, CCPs and custodians?

7. Operations
Increased margin calls, T+1 settlements. Dispute management & new escalations to risk teams. New target operating models. Collateral settlement and dispute resolution, operational risk management & daily KPIs and KRIs.

8. Optimisation
Long boxes, collateral drag, cash or non- cash, CTD/BTR selection, transformation, mobilisation, upgrade/downgrade, widening of schedules for new collateral types (Equities / MMFs / UCITS etc.)

9. IM Model Ownership
Initial Margin models (ISDA SIMM vs Schedule), dealer calcs, model governance / development & escalation documentation, testing, validations, approvals, audits, backtesting, benchmarking, new product approvals.