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The International Swaps and Derivatives Association, Inc. (ISDA) today announced an update to the licensing program for ISDA’s proprietary and patent-pending Standard Initial Margin Model (SIMM) for non-cleared derivatives, offered commercially under the name ISDA SIMM™.
Under the revised licensing program, any market participant will be able to license the ISDA SIMM™ to calculate initial margin for its own or its clients’ non-cleared derivatives transactions. Third-party vendors will also be able to license the ISDA SIMM™ for proprietary services or products. As part of the revised terms, an annual licensing fee will apply to all those who use the ISDA SIMM™. The licensing fees collected will cover annual maintenance and recalibration costs associated with the ISDA SIMM™ to ensure it continues to meet current and future regulatory standards. The licensing fee will be reviewed annually.
The purpose of ISDA SIMM™ is to establish a standard model that meets regulatory standards, which all authorized licensees can use to calculate initial margin in a manner that is consistent with non-cleared derivatives margining rules. By using a standard framework to calculate initial margin, licensed counterparties can reduce the potential for disputes. A common methodology also permits timely and transparent dispute resolution and allows consistent regulatory governance and oversight.
ISDA SIMM™ is US Patent Application No. 62/154,261, titled ‘SIMM Methodology for Calculating SBA Margin’.
Additional information regarding the SIMM project is available on the ‘ISDA WGMR Implementation’ section of ISDA’s website.
