The bourse is linking up with Cassini Systems, which provides pre- and post-trade margin and collateral analytics for derivatives markets, to help SGX market participants prepare to meet the Uncleared Margin Rules (UMR) requirements.

Under the partnership, Singapore Exchange (SGX) will use Cassini's domain expertise to provide market users with complimentary analyses to determine their average aggregated notional amount (AANA), representing the gross value of open, non-centrally cleared derivatives positions, according to an announcement on Wednesday.

AANA helps regulators determine whether a firm falls in scope for each phase of UMR, with Phase 5 – which affects banks, asset managers, hedge funds and pension funds – scheduled to take effect in September 2021. These firms are subject to a mandatory exchange of Initial Margin (IM) with their counterparties for their bilateral over-the-counter (OTC) agreements over the $50 billion IM threshold per counterpart.

«While the consecutive three-month period for officially determining in-scope status for Phase 5 will be in 2021, SGX and Cassini are offering the service in advance so firms potentially meeting the $50 billion AANA threshold can take steps now to assess their status, adjust their positions and look for alternatives to certain non-cleared products,» the announcement said.

Early Preparation

UMR was set in motion at the G20 meeting in 2009, following the global financial crisis. It requires firms using over-the-counter derivatives to post margin on those transactions. Phases 1 to 4 covered firms with $750 billion+ in notional value. About 1,000 firms are expected to be affected in the final phase, scheduled to take effect in September 2022, which has an AANA threshold of $8 billion.

«Those firms that conceivably could fall in scope for Phase 5 should immediately begin efforts to understand their AANA and strategize on how they might identify opportunities to re-allocate their portfolio, reduce their margin obligations to potentially achieve substantial cost savings and delay falling in scope while still meeting their trading goals,» Liam Huxley, CEO and founder of Cassini, said.

In April, Cassini established a presence in Sydney, its first Asia Pacific office, from where it hopes to grow its client base in the region.