ISDA will continue to manage the SIMM’s development through the established governance framework to preserve its stability and reliability as more users take up the methodology and invest in associated infrastructure.
When it comes to the changes associated with the financial reform agenda, the work to implement the margining of non-cleared derivatives has to be one of the most significant and transformational. The phase-in of the non-cleared margin rules is roughly half way complete, with phases three, four and five coming into scope in 2018-2020. ISDA has helped the industry every step of the way, and it is important to highlight the work that lies ahead to integrate small banks and a broad range of buy-side members and commercial end users.
While much of the industry’s work is notable, including the rewriting and renegotiation of the existing variation and initial margin (IM) documentation, there is nothing as transformational as the work done to produce the ISDA Standard Initial Margin Model (SIMM). With more and more market participants coming into scope of the margin rules in the next few years, the ISDA SIMM will only increase in importance.
ISDA intends to retain the current methodology structure for the ISDA SIMM, so counterparties can be certain about relying on it in the months and years ahead. Use of a single, simple model like the SIMM addresses operational use, model approval, legal documentation, economical running costs, transparency and infrastructure development by users, regulators, vendors and middleware providers.
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