When Independent Amount meets Initial Margin
ISDA’s ‘next generation’ versions of the Reg IM documentation set out three different options for managing the combination of IA and Reg IM, in the ‘margin flow approach’:
- Distinct (IM) approach
- Greater of (IM/IA) approach
- Allocated (IM/IA) approach
Each comes with different levels of system and operational complexity and, crucially, a requirement for different amounts of collateral to be posted. Alan Sheehan of Calypso Technology explores the three different options.
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