Grygo is chief content officer for FTF
Officials at the International Swaps and Derivatives Association (ISDA) and the Linklaters law firm report that BNY Mellon is the first custodian to go live via the new custody support function of ISDA Create — IM, an online, initial margin automated documentation support offering.
The IM online tool allows firms to electronically negotiate and execute IM documentation, and was the first offering of the ISDA Create digital documentation platform.
The new custody feature is intended to be an additional area of support for the production and agreement processes needed for key IM documentation. The new feature also provides access to structured legal data, officials say.
“This will significantly reduce the burden on those firms that are in-scope for regulatory IM requirements, and creates a one-stop shop for their IM documents,” says Doug Donahue, a partner at Linklaters, in a prepared statement.
The custody support is a follow-up to the launch in January of ISDA Create — IM offering, which is intended to help financial services firms cope with the increasingly tougher IM compliance requirements that hit firms this year and will impact more firms in 2020.
The ISDA Create – IM function, which is available to ISDA members and non-members, is free to buy-side securities firms.
The new custody help will let users “access bilateral custody agreements and tripartite account control agreements (ACAs) in digital form on ISDA Create,” according to ISDA’s announcement.
“ACAs govern the terms of collateral segregation and management between a custodian and two trading counterparties, while bilateral custody agreements govern a pledging client’s unencumbered assets with a custodian,” according to ISDA officials. “The ability to negotiate bilateral custody documents is already available on ISDA Create. The negotiation of tripartite ACAs will become available later this month.”
As for BNY Mellon, it has been looking for “ways to simplify the non-cleared margin workflow for clients and enable them to service the entire collateral lifecycle with the minimum number of touch points,” says Jonathan Spirgel, global head of segregation and liquidity services at BNY Mellon, in a prepared statement about the custodian function.
The new ISDA Create — IM function offers an “all-in-one automated documentation solution for clients that we are very happy to support,” Spirgel adds.
“Since launch, ISDA Create users have had the opportunity to negotiate ISDA IM documents online with multiple counterparties simultaneously and they will now have the ability to do the same for their custody agreements too. This is just the start, and we’re looking to introduce other ISDA and non-ISDA documentation to ISDA Create,” says Katherine Tew Darras, ISDA’s general counsel, in a statement.
ISDA reports that more than 50 firms have joined the ISDA Create platform “for live negotiation of IM documentation. Those firms include some of the largest buy- and sell-side market participants in North America, Europe and Asia. In addition, more than 160 firms are actively testing the platform ahead of the phase five and phase six implementation of initial margin requirements in September 2020 and September 2021, respectively.”
An online video that explains what ISDA Create – IM does can be found here.
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