日別アーカイブ: 2022年11月19日

As the ISDA 2021 EONIA Collateral Agreement comes into effect, it is important to understand what it means for financial institutions and their clients.

ISDA, or the International Swaps and Derivatives Association, is a global trade association that represents entities in the derivatives market. The EONIA Collateral Agreement refers specifically to the European overnight index average (EONIA) and how collateral is exchanged for derivatives contracts.

Under the new agreement, there are several changes to how collateral is managed. One of the most important changes is the switch from EONIA to the euro short-term rate (€STR) as the benchmark for calculating interest rates. This change was made to comply with regulations set forth by the European Central Bank.

Another change is the requirement for margin exchange for non-cleared OTC derivatives. This means that financial institutions are now required to exchange collateral for certain types of derivatives contracts that previously did not require collateral. This is intended to increase transparency and reduce risk in the derivatives market.

The ISDA 2021 EONIA Collateral Agreement also includes provisions for the use of third-party custodians and the types of eligible collateral that can be used for margin exchange. These provisions aim to ensure that collateral is kept safe and that financial institutions have access to a diverse range of collateral options.

For clients of financial institutions, the new agreement may result in increased collateral requirements for certain derivatives contracts. It is important for clients to review their contracts and understand any changes in collateral requirements to ensure they are prepared for any additional margin calls.

Overall, the ISDA 2021 EONIA Collateral Agreement marks a significant change in how collateral is managed in the derivatives market. While there may be some adjustments required for both financial institutions and their clients, the end goal is to increase transparency and reduce risk in the market.