In line with Basel III, each entity must ensure there are sufficient resources allocated to collateral management to ensure there is an efficient margin call agreement and collateral settlement process. All collateral processes and margining logic should be reviewed internally on an annual basis to ensure the current policy is reflective of the current market environment. In the event of a collateral margin call dispute, both counterparties should have a contingency plan documented and agreed common source of information (i.e. price or FX source) to allow the margin call to be agreed. In the event that a counterparty is not sufficiently completing the above, resulting in delayed margin call agreement or even resulting in under-collateralisation, the counterparty may be penalised. I.e. increased pricing, increased margining or cease trading. (IBP-165 UNDER ISLA REVIEW)
Already a member? Login to your account
Interested in Becoming a Member?
ISLA’s members span the breadth and depth of the securities lending industry, and there are many benefits of joining the Association’s network.Become a member today