The FINANCIAL — Intercontinental Exchange on October 8 announced that the International Swaps and Derivatives Association, Inc. (ISDA) has selected ICE Benchmark Administration (IBA) to build and operate the crowdsourcing utility for the ISDA Standard Initial Margin Model.
The appointment follows an extensive selection process run by a committee comprised of ISDA staff and industry participants which began in July this year. IBA intends to launch the crowdsourcing utility prior to the start of new margin rules for non-cleared derivatives on September 1, 2016, according to Intercontinental Exchange.
The ISDA SIMM is a common methodology for the calculation of initial margin requirements for non-cleared derivatives. The methodology has been developed as part of ISDA’s Working Group on Margin Requirements (WGMR) implementation initiative to help market participants meet new margin rules for non-cleared derivatives.
As the provider of the crowdsourcing utility, IBA’s role will be to develop a service that covers the aggregation and compilation of risk data to enable market participants to implement the ISDA SIMM consistently and to ensure that consensus results are used for the margin model’s risk buckets and weightings. While ISDA will retain an oversight role for the crowdsourcing utility, IBA will work with ISDA to establish a new governance framework for the administration of the crowdsourcing utility.
Finbarr Hutcheson, President, ICE Benchmark Administration said: “We are delighted to have been selected to build and operate the new crowdsourcing utility for the ISDA SIMM™, which is a reflection of the trust the market has in our independent, robust governance structure. The service will allow the OTC trading community to leverage our purpose built technology. This solution is already used extensively for interest rates and precious metals and will be extended to cover margin data for non-cleared derivatives. Our experience in reforming and launching benchmarks will help ensure a seamless implementation for the ISDA SIMM crowdsourcing utility.”
Since its establishment in 2013, IBA has become the world’s most experienced and trusted provider of regulated benchmarks. This has been enabled by IBA’s significant investment in building new, highly-automated, in-house technology for the calculation and distribution of benchmark data as well as implementing new surveillance and governance procedures across the three benchmarks IBA currently administers: ICE LIBOR, LBMA Gold Price and ICE Swap Rate.