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November 27, 2020

Account Control Agreement Umr

Filed under: Uncategorized — Mark Baker @ 5:02 pm

[23] The calculation is done at the main level – the company that participates in the transaction, usually the fund. For pension funds or asset owners who use managed accounts in which multiple managers manage a portfolio that is part of a legal entity, they should consider AANA on an aggregate basis for all of their portfolio managers. The rules require a remote insolvency framework without reuse for assets. As such, the initial margins are transferred to the insured party under a security interest regime and a specific guarantee framework must be put in place to protect assets in the event of a late payment by one of the trading partners. This framework is based on a specific “trilateral” (ACA) account control agreement signed between the parties and a custodian. Customers must each hold a “long check” of potential security with the triparty custodian. After approval of the im-margin calls, each party is obliged to order the custodian of the RQV (guarantee balance required). This runs counter to the traditional management of VMs, in which each party will also grant the guarantees to be pledged before hiring the custodian. As you can see from the architecture of the document above, the rules greatly increase the documentary architecture of a fund. In addition, new parties will be involved in the negotiation of certain documents, meaning that up to four parties could participate in the negotiation of a set of documents between two parties. ACAs can often take longer to negotiate than is normally thought.

The reason is that not all SDs have active ACA with all administrators. The early phases of the UMR and the participation of more participants should reduce the time required to negotiate ACCORDS and child care agreements, if the parties become more familiar with this agreement and if more agreements are negotiated. Managers can limit the amount of trading space they offer the fund. Both models pose challenges for managers because they have to choose the method they use and work (i) with a credit, or (ii) develop in-house to be able to calculate the IM requirements. Regulators were aware that managers should not “pick cherries” on the method to be used for each trade only on the basis of a lower margin requirement. The method chosen must be consistent and based on other fundamental considerations. Companies should have a clear rationale for their choice, as well as any changes in methodology they can adopt. In addition, when a manager chooses to use SIMM, he must obtain a licensing agreement with ISDA or cooperate with a licensed siMMS provider. There are two versions of the security agreement, one for the use of the Clearstream collateral account on behalf of the security provider (pledgor/ad part) and the other for use when the Clearstream collateral account is in the name of the security collector (Pledgee/Collection Party).

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