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Record Currency Management Limited

The proposed requirement to impose variation margin for foreign exchange forward contracts and foreign exchange swaps on a much wider range of counterparties than internationally envisaged, including pension funds and other long-term institutional investors across the European Union, will impose significant new cost and operational demands on such counterparties. Such requirements would go beyond those set out in the BCBS-IOSCO guidance, would breach international consistency in particular by going beyond the US “Dodd-Frank” requirements, and may deter such investors from undertaking prudent risk management activities. Sound risk management and international consistency would be maintained by explicitly limiting the requirement to post and collect variation margin to contracts between banks and counterparties that are financial institutions and systemically important non-financial entities, defined so as to exclude pension funds and other long-term institutional investors. Please see the attached document “Record Currency Management Limited RTS Risk Mitigation Submission July 2014 Final.pdf” for more detail.
As above, requiring pension funds and other long-term institutional investors to post and collect variation margin on foreign exchange forward contracts and foreign exchange swaps imposes significant operational as well as cost demands, as well as breaching international consistency with BCBS-IOSCO guidance and the Dodd-Frank requirements. As above, the solution would be explicitly to limit the requirement to post and collect variation margin to contracts between banks and counterparties that are financial institutions and systemically important non-financial entities, defined so as to exclude pension funds and other long-term institutional investors. Please see the attached document “Record Currency Management Limited RTS Risk Mitigation Submission July 2014 Final.pdf” for more detail.
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Grady Laurie
+441753852222