Understanding UMR for Investment Management Firms

The European market Infrastructure Regulation (EMIR) is bringing in Initial Margin (IM) requirements for firms engaged in the uncleared derivatives market. These Uncleared Margin Rules (UMR) have a phased in threshold that steps down year on year. In September 2019 firms (Phase IV) that have an aggregate average notional amount (AANA) of non-centrally cleared derivatives outstanding of EUR750bn or greater will be required to exchange IM.

The real pressure point for the majority of asset managers is September 2020 (Phase V) when the threshold steps down materially to an AANA of only EUR 8bn.

Firms have many technological, legal and operational challenges to overcome in order to meet the deadline. The exchange of IM requires a tripartite agreement between the two counterparties and a custodian. Whilst simply complying with IM regulations will be complex for asset managers, it is also vital to ensure that the exchange of collateral is achieved in the most cost efficient manner.

Key learning objectives

• Understand the background and purpose of the Uncleared Margin Rules
• Understand the Initial Margin Rules that firms are subject to under EMIR and the impact of EMIR Refit 2.1
• Understand the documentation required as a result of the Initial Margin Rules
• Discuss key sections of the Initial Margin documentation that are often negotiated and/or that need to be checked from a compliance perspective
• Understand why firms obtain legal opinions in relation to the Initial Margin Rules and what such opinions cover

13:30 Registration and networking lunch

• A sandwich lunch will be provided and an opportunity for you to network with the trainer and other delegates

14:00 Regulatory overview

• Background to the Uncleared Margin Rules
• Overview of EMIR Initial Margin Rules
• Changes introduced by EMIR Refit 2.1

14:30 Introduction to documentation

• Documentation impact and structure
• Types of custodian/platform
• Types of documentation and pairing combinations

15:00 Bilateral documentation

• What bilateral documentation does at a high level
• Focus on specific sections of bilateral documentation that either bring complexity or are often negotiated

15:45 Break

16:00 Account Control Agreements

• What Account Control Agreements do at a high level
• Focus on points to check from a compliance perspective

16:30 Eligible Collateral Schedules

• What Eligible Collateral Schedules do and how they fit into the documentation structure

16:45 Legal opinions

• What legal opinions are required by EMIR in the context of Initial Margin?
• What opinions are available at an industry level and what do they (and don’t they) cover

17:00 IA perspective

17:15 End

This programme will be of interest to both sellside and buyside firms subject to the uncleared Initial Margin Rules and those providing services to such firms. In particular, it will appeal to individuals working or engaged in:

• Operations
• Compliance
• Risk management
• Legal
• Client services

Emma Dwyer is a partner in Allen & Overy’s derivatives and structured finance team in London. Emma is a member of the Markets Innovation Group and advises on a broad range of issues relating to derivatives and structured finance transactions. Emma is an expert in the new regulatory environment for derivatives and is at the forefront of analysing the complexities and changes that these regulations require. As a key market educator, Emma continues to speak at many industry events for ISDA and others around the world on EMIR and Brexit.

Guy Antrobus is a partner in Allen & Overy’s derivatives and structured finance team in London. Guy’s practice has a particular focus on issues relating to the EU Financial Collateral regime and regulatory capital. Guy was the lead English lawyer advising ISDA on the updated English law Initial Margin Credit Support documentation resulting from the WGMR initiative. Guy also authored all of the ISDA WGMR English law collateral opinions. Guy was the lead lawyer advising a number of major dealers in the derivatives markets on the implementation of their collateral documentation resulting from WGMR, including on the Prime Services side.

Victoria White is an associate in Allen & Overy’s derivatives and structured finance team in London. Victoria has extensive experience advising major dealers in the derivatives markets on the implementation of collateral documentation resulting from WGMR. Victoria has also advised on various bespoke netting, guarantee and collateral arrangements, as well as hedging transactions.

IA Member £650.00 +VAT
Non-Member £780.00 +VAT

Pay using a credit card online, or if you wish to be invoiced please email your full details to: Training@theia.org

PLEASE NOTE: Full payment for the course must be made prior to the course commencement date.

Any cancellation must be made in writing. For all cancellation received 15-30 days prior to the course start date, 50% of the course fee is still payable. No refund is given for a cancellation made 14 days or less prior to the commencement of a course. Transferring from one course to another is treated as a cancellation. You can substitute one delegate for another at no additional cost. In this instance, please give two business days’ notice.