As you may have heard, Variation Margin went into effect today, March 1, 2017.
This will impact entities that are considered “Financial End Users”, which may include:
- Registered investment companies
- Business development companies
- Private funds
- Commodity pools
- Employee benefit plans
- Investment advisers
- Broker-dealers
- Insurance companies
- Banking and lending entities (there are exceptions to these entities)
What does this potentially mean for you?
If an affected entity is transacting a Swap, as defined by the CFTC, the following will need to be put in place:
- Credit Support Annex or “CSAs” for short.
- Tri-party control agreements, if a registered investment company.
- Updates to existing CSAs and collateral documentation to reflect the new regulatory requirements.
Alternatively, the updates to existing CSAs may be completed via the ISDA 2016 Variation Margin Protocol.
For more details about Variation Margin, its requirements, and its impact on your firm, please reach out to your partner at Bridge Mason Advisors.
