Uncleared Margin Rules (UMR) Phase 5 Euroclear triparty solutions - - PowerPoint PPT Presentation

Uncleared Margin Rules (UMR) Phase 5 – Euroclear triparty solutions Business & Operational Update

12 May 2020

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UMR Phase 5 – Market Update

• BCBS-IOSCO: Deferral of final implementation 2021 / 2022
• Euroclear service levels continued as originally planned for Sept 2021

► Full support ► Keeping Commitment

• Some 1.200 – 1.400 “pairs” indicated for UMR Phase V implementation
• More than 25 “new” clients (banks and sellside) in “Admission”
• Please update your Euroclear Relationship Manager about your - and your

counterparts’ – intentions

• Admission / Triparty Setup / UMR Onboarding

►https://my.euroclear.com/eb/en/reference/services/collateral-

management/otc-derivatives-margin-service/non- cleared_otc_derivative_margining_service-e-elearning.html

• OTCD Documentation

►https://my.euroclear.com/eb/en/reference/services/collateral-

management/otc-derivatives-margin-service/non- cleared_otc_derivative_margining_service.html

Connecting to Euroclear Bank

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UMR Set-up Triparty documentation, accounts opening and activation of triparty relations Define your operating model. If Triparty, as Pledgee:

• 1. Set up with your Pledgee Representative

OR

• 2. Start your admission process in Euroclear Bank

Build your knowledge of Euroclear Bank and Triparty Digital stand-alone training modules Bilateral negotiation & documentation ISDA & Euroclear Bank joint documentation

Your UMR Operational set-up in Euroclear Bank How does it look like?

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• Collateral

Profile

• 1. Bilateral negotiation of the

margin terms between the parties 2. Legal entity signoff on the Triparty documentation (to subscribe to the EB Triparty services)

• 3. Triparty accounts activation

(Pledgor and pledgee) Bilateral negotiation & documentation ISDA & Euroclear Bank joint documentation Triparty documentation Euroclear Bank single form of agreement Opening of a multiseg pledged account & reporting subscription Activation of Triparty relation

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A Custodian acts as Pledgee Representative for its Buy Side Client Euroclear Bank

Buy Side

Pledgee Representative

EB Third party pledge holder a/c (1 MultiSeg a/c per Pledgee)

Sub div Pledgor 1 Sub div Pledgor 2 Sub Div Pledgor n

Buy Side collect Reg IM in Euroclear Bank triparty

Sell Side will most probably want to keep existing Triparty set-up to post collateral

Pledgor n Pledgor 2 Pledgor 1

Triparty Collateral Management

Sub div Pledgor 1 Sub div Pledgor 2 Sub Div Pledgor n Pledgor n Pledgor 2 Pledgor 1

Euroclear Bank Buy Side as direct Client of Euroclear Bank

Triparty Collateral Management

Buy-side as Pledgee

EB Third party pledge holder a/c (1 MultiSeg a/c)

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Buy Side with their preferred custodian using the Collateral Portfolio Service

Buy Side provide Reg IM using triparty

Buy-side can use triparty set up to provide collateral

Sell Side Buy Side

Euroclear Bank

Buy Side as direct Client of Euroclear Bank

Triparty Collateral Management Buy Side as Pledgor

Custodian

Buy Side 1 Sell Side 2 Sell Side 1 Sell Side X

Collateral Portfolio Triparty Collateral Management Sell Side as Pledgee Buy Side as Pledgor Sell Side as Pledgee

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UMR Phase 5 Set-Up of UMR agreements and pairing

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• By end-May, provide:
• signed documentation

(single form of agreement and reporting subscription)

• List of counterparty

pairs

• “tailor made”

collateral profiles

May

• By end-July, provide :
• Account activation

details

• Activation of “tailor

made” profiles

• Activation of a

“standard” profile or a “high-grade” profile, or

• replicate a collateral

profile

July

• Processing of legal doc and

reporting subscription as of 01 March

March - April

• FINALISATION IN EB

August

Final deadline 31 July

Your UMR Operational set-up in Euroclear Bank Timeline

Detailed timeline

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@ Legal Documentation RG812

• Provides two signed

copies per legal entity

Fast Track Activation

• Provides Excel RG1011 and

send it via e-mail (accounts and activation details)

• Provides one signed copy
• f each profile

Collateral Profile

Once per legal entity Once per legal entity Per batch

@

Per batch

Counterparty list (pairs) RG1003

• Provides list of

counterparties

OTCD Set-up – Overview of documentation

Legal Documentation RG812

• Provides two signed

copies per legal entity

Once per legal entity PLEDGOR PLEDGEE

@ Fast Track Activation

• Provides Excel RG1011 and

send it via e-mail (accounts and activation details)

Per batch Once per legal entity

Account Opening RG148 & Reporting info

• Provides one signed copy

per legal entity (RG148)

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Legal Pack (RG812) Collateral

Profile RG148

Pledgor Pledgee

Pairs Account Opening & Reporting subscription Contract Activation

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FastTrack Activation details

1 3 6

Confirmation + Subdivision id Service Activation FastTrack Activation details

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FYI – confirmation

• f a/c opening &

reporting & pairs

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Legal Pack (RG812)

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Clients on-boarding process

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Confirmation + Subdivision id

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FYI a/c nbr & reporting

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• You can

1. build your own collateral profile (“tailor made”) using the building blocks of the different templates shared with you or profiles activated in previous waves 2. Independently customize your collateral profile directly in EasyWay (without the intervention of Euroclear) 3. copy an existing profile as many time as you may require 4. agree to have your counterparty's collateral profile applied to your triparty contract

Building your tailor-made collateral profiles (1)

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• You can create 1 “tailor-made” collateral profile per counterparty

and reuse it as a standard profile across your counterparties

• In order to easily create and negotiate a profile with your

counterparty, we suggest you start by using the wider profile possible (in the framework of your acceptable risks)

• Then, take out the items / criteria that are not accepted

between you and your counterparty

• It is easier, especially when using EasyWay, for you and your

counterparty to take out items / criteria rather than starting with a restrictive one and add criteria

Building your tailor-made collateral profiles (2)

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• With our EasyWay solution for Collateral Contracts Management, all triparty collateral profiles available in

electronic format and human readable

• Benefits

► Faster set up and easier amendment: Clients can negotiate, amend and create their profiles online, with

electronic or wet signature

► Easy monitoring: Consult and query all profiles, able to see a Dashboard with contract status ► More efficient and faster replication: easy to copy sets from existing ones

• Bilateral ISDA contracts available in electronic format on ISDA Create

EasyWay Contract Management

We strongly recommend the usage of EasyWay to speed up the set up and implementation of eligibility sets