Uncleared Margin Rules Phase Six: Five Step SCOPE Approach
John Hunt was quoted in the article, "Uncleared Margin Rules Phase Six: Five Step SCOPE Approach," published by FinOps Report on September 7, 2021.
The article discusses how collateral management and compliance managers at hundreds of fund management shops need to start preparing for the final phase of uncleared swap rules to avoid finding themselves in hot water with regulators or counterparties, warn operations and legal experts.
Finding a third-party or triparty custodian won’t be as difficult as some of the largest custodian banks — BNY Mellon, State Street, JP Morgan, and Citi– are offering services for account control agreements. The bigger challenge will be agreeing on the wording of the account control agreements which could take anywhere from several months to over a year to complete. "The account control agreements need to be phrased correctly to avoid any interpretation by custodian banks as to the rights of the pledgor and pledgee," comments John. Working out CSAs can also be tricky. "Fund managers with lower uncleared swap trading volumes will find it harder to push back against the demands of broker-dealer and bank counterparties," says John.