Act now to be prepared for Uncleared Margin Rules (UMR) Phase 6
A major pain point for Newly In-Scope Counterparties (NISC’s) is custodian connectivity. Specifically for the buyside who are unfamiliar with the triparty custodian setup, becoming a pledgee in an UMR transaction comes with a number of technical, systematic considerations. Whilst a host of direct connectivity options are available, third party vendor connectivity can offer advantages.
Best placed to supporting customers
The final phase of UMR implementation, represents a significant challenge for all market participants. Recognising the scale of the challenge, and building on the experience of previous phases, Clearstream continues to support its customers.
Key dates and process changes
- 31 March 2022: To open accounts for 1 September 2022, all counterparty pairings, and for new customers KYC documentation should be submitted to Clearstream by 31 March 2022
- 30 June 2022: Collateral documentation should be submitted by 30 June 2022
- Pledgee’s will not be required to hold accounts with Clearstream
- Clearstream have further standardised the creation of collateral schedules
- Pledgee’s will not be required to establish direct connectivity with Clearstream, rather can connect via an approved third party
Clearstream has pre-established connectivity solutions with a number of third party vendors, such as Cloudmargin to facilitate E2E Triparty messaging flows.
Benefits from using third party vendors connectivity
The benefits that can be realised from using third party vendors to support connectivity include reductions in operational spend, scalability, improved delivery time and the availability of additional proprietary tools or software, all of which can introduce an advantage for firms leveraging third-party relationships effectively, especially within the context of tight regulatory deadlines.
Illustration of an example/solution with CloudMargin acting as collateral vendor with a number of flexible options to suit individual customer requirements:
- triparty instruction only
- triparty instruction plus workflow
- triparty instruction plus workflow and calculations
- triparty instruction plus workflow, calculations and AANA
- Via CloudMargin UI, Collateral Receiver will agree exposure with Collateral Provider through Acadia Margin Manager messaging
- Upon authorisation, CloudMargin sends agreed exposure (MT527) message to Clearstream
- Clearstream will match MT527s provided by Collateral Receiver and Collateral Provider
- Clearstream will provide status update messages (MT558) to both parties
- Clearstream will provide collateral allocation reporting (MT569) to both parties
- Collateral Receiver will be able to receive reporting from CloudMargin
Clearstream can also receive communications from other automated routes.
For further information, please reach to your Clearstream Relationship Manager, or contact us via