ISDA, IHS Markit Unveil New Variation Protocol Ahead of 2017 Regulation

ISDA Amend helps streamline and automate the process for amending existing collateral documents.

The International Swaps and Derivatives Association, Inc. (ISDA) and IHS Markit (Nasdaq: INFO) have jointly launched the ISDA 2016 Variation Margin Protocol on ISDA Amend, a new directive that helps streamline collateralization ahead of an upcoming round of regulation in 2017, according to an ISDA statement.

IHS Markit is a provider of comprehensive information, analytics, and solutions for the multiple industries and markets globally. The new launch of the protocol on ISDA Amend will help automate the process for amending existing collateral documents – this is important as it helps venues shore up the ability to forge new agreements in compliance with new variation margin requirements slated to go into effect on March 1, 2017.

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The protocol itself currently encompasses margin rules for non-cleared derivatives issued by most major jurisdictions and economic blocs, such as the US, the European Union, Japan, and Canada.

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More specifically, the ISDA Amend platform helps allow counterparties to electronically share specified questionnaires via a centralized online portal – this is instrumental for the process as it removes a reliance on bilateral negotiations, thereby streamlining the overall flow. ISDA Amend also bills itself as a free service for buy-side firms and corporations.

On this platform, counterparties are able to make elections, including which specific regulatory regimes apply and which method will be utilized to foster the requisite changes to their respective documentation. ISDA Amend also allows for the automation of the aforementioned questionnaires between counterparties.

According to Katherine Darras, ISDA’s General Counsel, in a recent statement on the launch: “Starting on March 1, the new variation margin rules will apply to a wide universe of financial institutions from various jurisdictions, and these firms will be required to make important changes to their derivatives documentation.”

“The Variation Margin Protocol available on ISDA Amend addresses the multijurisdictional compliance challenges of the non-cleared margin rules. We have closely partnered with ISDA and its working groups to develop a rules-based, electronic solution that supports the major margin regulatory regimes and helps the broader industry meet margin requirements within a compressed time frame,” explained Darren Thomas, Managing Director and Head of Counterparty Manager at IHS Markit.

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