The International Swaps and Derivatives Association (ISDA) and law firm Linklaters report that Bank of New York Mellon has published key custody documentation on ISDA Create.
This will enable participants to access BNY Mellon triparty and third-party account control agreements (ACAs) through the ISDA Create platform, the digital platform established by Nakhoda, Linklater’s internal technology start up.
This will enable market participants to negotiate and confirm documentation using the electronic platform, enabling the associated legal data to be captured digitally.
This will simplify contractual negotiation and compliance requirements, according to a joint statement from ISDA and BNY Mellon, enabling BNY Mellon clients to access BNY Mellon ACAs, which define the terms for collateral segregation and collateral management between a custodian and the two trading parties, along with ISDA’s credit support documentation.
Phase six of the initial margin (IM) requirements under the Uncleared Margin Rules (UMR) will bring several hundred small firms under the scope of UMR rules. Many of these firms lack the resources to complete detailed bilateral negotiations with counterparts and custodians, ISDA notes.
ISDA’s general counsel Katherine Tew Darras says: “Having both custody and regulatory IM documentation available on the ISDA Create online platform will bring significant efficiencies to the negotiation process and help phase six firms to meet the September 2022 compliance date.
“Phase six will undoubtedly be a challenge for our entire industry, so we applaud BNY Mellon for deciding to leverage the capabilities of ISDA Create to negotiate all of its phase-six ACAs.”
BNY Mellon Markets head of margin services Ted Leveroni says: “BNY Mellon is pleased to publish and negotiate our regulatory initial margin triparty and third-party ACAs on ISDA Create, which gives us and our clients the opportunity to complete the legal documentation required for margin segregation services on a common platform.
“This places our firm in a better position to service clients during phase six, saves our clients time, simplifies compliance efforts while also giving all participants a complete digital repository of the resulting legal data.”
Doug Donahue, partner at Linklaters, says: “Phase six will undoubtedly be a challenge for our entire industry, so we applaud BNY Mellon for deciding to leverage the capabilities of ISDA Create to negotiate all of its phase six ACAs. Among other things, by negotiating on ISDA Create, BNY Mellon will significantly reduce the administrative burden on phase-six firms and simultaneously give them the ability to operationalise their collateral data with no additional effort.”
