Asset managers not ready to comply with UMR
According to State Street’s survey, 81% of asset managers are lagging in their preparations to comply with the Uncleared Margin Rules (UMR) aimed to reform the over-the-counter (OTC) derivatives market after the Global Financial Crisis (GFC).
The study, which measured the perceptions and readiness of 300 asset managers and asset allocators in 16 countries, also found that institutions with a September 2021 (Phase V) or September 2022 (Phase VI) deadline are unprepared to comply with all facets of UMR.
However, half of respondents expected these requirements would have a positive impact on overall operations, with 40% of the smaller firms surveyed anticipating a negative impact, compared to just 20% of larger firms.
Public pensions were most likely to expect a positive impact, while corporate pensions were most likely to anticipate a negative impact.
Additionally, institutions were using mitigation strategies and turned to third parties to ease the burden of complying with UMR, with 80% of those in compliance functions indicating that they had faced challenge in incorporating new workflows and 56% of firms saying they were planning to adjust strategies by reducing OTC contracts to limit the impact of UMR.
“UMR signifies a major change in the industry that aims to bring greater stability and transparency to the OTC derivatives market,” Nadine Chakar, head of State Street Global Markets, said.
“As we approach the deadline for the next phase, it is critical for buy-side firms of all sizes to be aware of the pending requirements and to not only effectively manage, but optimize, their liquidity and collateral needs with the right solutions and technology in place.”
AUTHOR
Oksana Patron
Recommended for you
Some 42 per cent of CEOs say they are actively reinventing their business to stay relevant in the next decade, with consumer services the most common choice for asset and wealth managers.
Former Ophir Asset Management chief executive, George Chirakis, has joined private equity manager Scarcity Partners, while the asset manager has appointed a replacement from Macquarie.
Australian Unity has appointed a fund manager for its Healthcare Property Trust, joining from Centuria Healthcare, as it restructures the product with a series of senior appointments.
Financial advisers nervous about the liquidity of private markets funds for their retail clients are the target of fund managers launching semi-liquid products which offer greater flexibility and redemptions.
