Collateral Management Japan, 2017

Asia Risk’s Collateral Management Japan | 7 June 2017 | Shangri-La Hotel Tokyo

With O’Delle Burke of JP Morgan joining the panel of Seiichi Tanaka of Mitsubishi UFJ Morgan Stanley Securities and Masahiro Ehara of Goldman Sachs, it turned out to be an interesting session with much of the focus on meeting the increasing challenges of non-cleared margin and the continuing need for greater efficiency through standardisation and automation.

Some photographs of the day with the kind permission of Asia Risk. 

Collateral Management Japan, 2016

Asia Risk’s Collateral Management Japan | 8 June 2016 | Shangri-La Hotel Tokyo

Collateral Management Japan 2016 Banner

Hopefully the irony of the following Risk.net article regarding the delay in implementation of the European non-cleared margin rules will not be lost on those who attended the Collateral Management Japan conference: Europe set to delay variation margin regime

Collateral Management Japan 2016 Panel 3 Participants
Collateral Management Japan: How is the global OTC derivatives reform driving the Japanese market?

Collateral Management Japan 2016 Panel 3

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Collateral Management Japan: Panel discussion

The Questions

  1. Margin for non-cleared derivatives is being phased in from September this year. From September 2016 the posting of initial margin is required by the largest financial institutions, with progressively more being added each September until 2020 when all but the smallest OTC counterparties will be included.  The exception is March 2017 when all counterparties will be required to exchange daily variation margin. Focusing on initial margin, how prepared is the market in Japan, how has the 9 month delay that has already been allowed effected attitudes and what do you see as the consequences of not being ready on time?
  2. Looking forwards to March next year, the short, regular VM settlement requirements are a significant challenge. Given that all counterparties will have to be able to value their own positions, handle disputes and both pay and receive margin, how do you see those challenges being overcome?  It is known that not all counterparties have ISDA Master Agreements and suitable CSAs executed between them, how big a task is getting them in place in time?
  3. Margin requirements are not just subject to Japanese rules but also to those of the counterparty’s jurisdiction.  What do you see as the key challenges and how do you see this added complexity being managed?
  4. Looking at this from a slightly different angle, with the introduction of non-cleared margin and the licensing of two additional CCPs in Japan (LCH and CME), although they are limited in the currencies they can currently clear, do you anticipate any changes in the market? In particular, the choice of counterparty and clearing venue due to collateral eligibility, concentration limits and so on? Are you seeing any migration from non-cleared OTC instruments to combinations of cleared instruments, even though their characteristics may not be a perfect match?
  5. Delays in MiFID 2 (The Markets in Financial Instruments Directive) were announced in February.  The regulations will now come into force in January 2018.  Although most of the RTS (regulatory technical standards/rules) relate to execution there are some related to post-trade.  Focusing on Japan, what have the effects been?
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Collateral Management Japan: Panel discussion questions

質問

  1. 清算されていないデリバティブの証拠金が、今年9月から段階的に導入されます。大手銀行は今年9月からイニシャル・マージン (IM) を支払わなければなりません。毎年9月に銀行の数が段階的に増え、2020年には小規模OTCカウンターパーティーほぼすべてが含まれるようになります。例外として2017年3月に、すべてのカウンターパーティーが日々の変動証拠金 (VM) のやりとりを行わなければなりません。IMや日本のマーケットがどの程度準備ができているかに注目した場合、すでに認められている9カ月の遅れは、どのように市場のやる気に影響を与えるのでしょうか?予定通りに準備が出来なかった場合、どのような結果がもたらされるのでしょうか?
  2. 来年3月、短期間、頻繁のVM決済の必要条件は大きなチャレンジを迎えます。すべてのカウンターパーティーが自身のポジションを評価し、紛争を処理し、証拠金の支払いも受け取りも両方できるようになった場合、これらのチャレンジはどのように克服されると思いますか?すべてのカウンターパーティーがISDA Master Agreements や適切なCSAの契約を結んでいるわけではありませんが、来年3月までにすべての契約が履行されるまで、どの程度の課題があるのでしょうか?
  3. 証拠金の必要条件は、日本の規則のみの対象となっているわけではなく、カウンターパーティーの管轄区域の規則の対象にもなっています。重要なチャレンジとして、どのようなものがありますか?
  4. 非清算証拠金が導入され、日本でLCH および CME の2つの新たなCCP が認可を受けました。LCHとCMEでは現在、清算できる通貨において限度がありますが、市場で今後何か変化が起こると思いますか?(特に、カウンターパーティーの選択やコラテラルの適格性による清算地、コンセントレーション・リミットなどについて)非清算OTC商品から特徴が完全に適合していないかもしれない清算商品の組み合わせへの移行はありますか?
  5. 金融商品市場指令 (MiFID) の遅延が2月に発表されました。規則は2018年1月に施行されます。規制技術基準 (RTS) のほとんどが施行に関連していますが、取引後に関連しているものもいくつかあります。日本に注目した場合、その効果はどのようなものですか?
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Collateral Management Japan: Reception – Michael Steinbeck-Reeves, Greg Ballesty (SmartStream), Murodkhon Djaparov (BNY Mellon)

Full agenda for the day: Japan Collateral Forum Agenda

All photographs are copyright © Asia Risk with all rights reserved and are reproduced here with their kind permission.

Quotes and comments for 2016

Some 2016 quotes and comments

India joins global move to tighten CCP capital standards

Author: Blake Evans-Pritchard
Source: Risk | 28 April 2016

India joins global move to tighten CCP capital standards

LCH-JSCC basis rockets for cleared yen swaps

Author: Tom Osborn and Lukas Becker
Source: Risk | 15 April 2016

LCH-JSCC basis rockets for cleared yen swaps

Derivatives Risk and Collateral Management Service

Author: Yasuaki Tani
Source: Kinzai | 4 April 2016

Article (Japanese only)

Japan’s Quick takes on Markitwire with domestic affirmation service

Author: Viren Vaghela
Source: Asia Risk | 15 Feb 2016
Categories: Derivatives

Japan’s Quick takes on Markitwire with domestic affirmation service

Quotes and comments 3

Some quotes and comments in the second half of 2015

Dealers warn of hit to Asia from short margin transfer time

Author: Viren Vaghela
Source: Asia Risk | 18 Dec 2015
Categories: Regulation

Dealers warn of hit to Asia from short margin transfer time

SGX mothballs US dollar swap clearing

Author: Viren Vaghela
Source: Asia Risk | 17 Sep 2015
Categories: Derivatives

SGX Mothballs US Dollar Swap Clearing

Quotes and Comments 2

Some quotes and comments in the first half of 2015.

Editorial

Source: Kinzai | 22 June 2015

 Kinzai 22 June 2015

Smooth operator: Japan looks to ease into electronic trading

Author: Aaron Woolner
Source: Asia Risk | 17 June 2015
Categories: Regulation

Smooth operator: Japan looks to ease into electronic trading

Low CCP compression rates in Japan vex foreign banks

Author: Viren Vaghela
Source: Asia Risk | 04 June 2015
Categories: Derivatives, Risk Management
Low CCP compression rates in Japan vex foreign banks

Quotes and comments 1

Some quotes and comments up to the end of 2014.

JSCC to gain DCO status from US regulator before year-end

Author: Viren Vaghela
Source: Asia Risk | 17 Oct 2014
Categories: Derivatives
JSCC to gain DCO status from us regulator before year end

(Reuters) REFILE-EU’s OTC derivatives proposals threaten Asian regulatory clash

Original article

(Reuters) UPDATE 1-Banks push for delay to introduction of derivatives rules

Original article

Asia dealers review CCP risk management approaches

Author: Viren Vaghela
Source: Asia Risk | 07 Apr 2014
Categories: Derivatives
Asia dealers review CCP risk management approaches

Japan dealers stop back-loading to CCPs due to de minimis uncertainty

Author: Viren Vaghela
Source: Asia Risk | 07 Jan 2014
Categories: Derivatives
Japan dealers stop back-loading to CCPs due to de minimis uncertainty

Crunch time over Sefs as Asian banks weigh up costs of participation

Author: Viren Vaghela
Source: Asia Risk | 12 Dec 2013
Categories: Derivatives
Crunch time over Sefs as Asian banks weigh up costs of participation

India gives green light to clearers

European and Indian regulators have reached an agreement that will allow European banks to continue trading in the South Asian country for the next six months.

Click the following link to view article:
http://www.efinancialnews.com/story/2013-09-09/relief-banks-india-gives-clearing-green-light?uniquekey=55692054ce966-132660&mod=emailafriend

Esma surprises market with fast-tracked advice

At a time when the market expects nothing but delays from regulators, Europe’s key watchdog the European Securities and Markets Authority did something unprecedented yesterday: it fast-tracked its hotly-awaited advice on foreign supervisory regimes.

Click the following link to view article:
http://www.efinancialnews.com/story/2013-09-04/esma-issues-surprise-early-advice?uniquekey=55691fe817b60-132659&mod=emailafriend

EU banks on trading knife-edge in India

European and Indian regulators are hoping to reach an eleventh-hour agreement that would allow European banks to continue trading in Asia?s third-largest economy.

Click the following link to view article:
http://www.efinancialnews.com/story/2013-09-03/eu-banks-on-knife-edge-as-esma-india-deadline-looms?uniquekey=55691f227acaa-132658&mod=emailafriend

Five reasons SGX might be attracted to LCH.Clearnet

The Financial Times yesterday reported that the Singapore Exchange is in talks with international clearing house LCH.Clearnet about taking a stake in the company. The development comes as the London Stock Exchange looks to seal its long-awaited deal to purchase 60% of the clearing house, at ?15 per share. The deal is expected to close at the end of this quarter.

Click the following link to view article:
http://www.efinancialnews.com/story/2013-02-06/five-reasons-sgx-is-moving-for-lch?uniquekey=55691e716d4c1-132657&mod=emailafriend

OTC clearers carve out niches in Asia

Policymakers in the Asia-Pacific region are preparing to implement the post-crisis reform agenda agreed by the G20 countries to transform the over-the-counter derivatives market.

Click the following link to view article:

http://www.efinancialnews.com/story/2012-11-05/otc-clearers-carve-niche-asia?uniquekey=55691d7c768d9-132656&mod=emailafriend