Re-papering Credit Support Annex (CSA)
Comply with new margin requirements for uncleared derivatives, before time runs out
New regulations on margin requirements from the Basel Committee on Banking Supervision’s (BCBS) and International Organization of Securities Commissions (IOSCO) have created a global standard for non-centrally cleared derivatives in order to reduce the risks associated with trading.
So what does that mean for financial firms?
It means you may need to re-paper all existing CSAs by March 1st, 2017* in order to continue trading.
Understanding the regulation and what it means for you and your counterparties is only the beginning. Re-papering or re-negotiating documents with UMR specific clauses and economics without a standardized process can be risky- and forget about manually editing thousands of them. Even identifying who is the correct contact at your counterparty and what information you need from them is potentially a huge task.
We’ve prepared a solutions process in partnership with one of the big four accounting, tax and advisory organizations to help you get started on your re-papering journey. They are already using this process for preparing to re-paper agreements on behalf of large banks, at a rate of thousands of agreements per month.
Prepare with a Process
1. Prepare and get organized
To handle the volume and complexity around managing margin requirements, you need to prepare for your process and evaluation, as well as what action items need to be checked off.
- Gather data on your existing agreements
- Put a team in place for carrying out this initiative
- Formulate a solutions plan
2. Interpret the protocol
Re-papering CSA’s to incorporate the Uncleared Margin specific requirements is time sensitive. Collateral operation systems need to be enhanced to include UMR-specific fields, accuracy of risk data and efforts to onboard and setup counterparty accounts efficiently. This will make all the difference in complying on time.
- Understand the size of the task, the requirements and time frames for you and your counterparties
- Determine the templates and re-papering changes that need to be made
- Define the protocol approach and when bi-lateral negotiations will be acceptable
3. Plan for and execute outreach
Working with your counterparties in the most productive way, is key for carrying out this process. Streamlining automation and workflow will help to efficiently gather information for the economics of the CSA agreement that needs to be re-negotiated.
- Automate the outreach process
- Complete data capture and update the CSA with the provided information from the counterparty
- Build e-mail templates and step by step instructions for guiding your counterparties through the re-papering or re-negotiating process, both on or off platform
4. Finalize and complete Outreach
Finalize your re-papered CSA and securely store all versions and markup, for audit purposes and re-use when needed. Having one secure system will allow you to instantly view or pass data to downstream collateral/reporting systems.
- Full version control
- Finalize the updated agreement with all counterparty signatures
- Store all versions on one secure repository
- Instantly view and report on data or transfer to other systems
Exari’s technology is your re-papering solution
Exari’s re-papering solution makes the entire lifecycle of re-papering existing CSAs that much simpler. Outreach-specific workflows, to the final stages of negotiation and approval, Exari’s document automation and contract management technology can suit any firm’s needs.
- Control a series of outreach e-mails through one secure and automated platform
- Streamline the counterparty setup and negotiation process
- Summarize all economic data in a clear, searchable repository including the final signed CSA
- Instant access to all CSA data for reporting or passing to collateral and downstream systems
*Subject to Regulator Confirmation