Uncleared Margin Rules - Frequently Asked Questions

Is UMR only for banks and hedge funds?

No. Initial margin rules apply to any firm who is in-scope of their local margin rules and has an AANA during the relevant observation period for each year at or above the minimum threshold. If your AANA is above the threshold, your firm will be subject to Initial margin rules. For further detail on the UMR timeline & How & When AANA is calculated, see cmegroup.com/umr respective sections.

The observation period for Phase 5 (Sep 2020 deadline) for U.S. covered entities is as follows: June, July and August 2019
For firms covered by jurisdictions, in the rest of world the Phase 5 observation period is as follows:  March, April and May 2020.

I am a corporate or a pension fund, am I exempt from UMR?

No, as with the previous question, it depends on your threshold.

Does my AUM dictate or affect whether I am impacted by UMR?

No, whether you will be in-scope is based on your AANA, which is calculated on open gross notional outstanding of non-centrally cleared derivatives.

I only trade derivatives as hedge transactions, am I still potentially impacted by UMR?

Hedging tools are not exempt from derivatives used in the AANA calculation, which in turn is used to determine whether a firm is in-scope for UMR.  See the tables in “Who and What Is In Scope for UMR?” section.

Will Initial Margin rules impact my prime brokerage relationships?

It may. Please reach out to your prime broker.

If I am above the IM threshold what does that mean? And what should I consider implementing as a result?

TriOptima offers a helpful guide for how to prepare for initial margin rules.
Be sure to also check out the CME Group UMR solutions resource page.

What tools are available to me to help delay or mitigate the impacts of Initial Margin rules?

CME Group offers several solutions to help you overcome UMR challenges, across bilateral and cleared markets. Explore our comprehensive offerings here.

Neither futures trading nor swaps trading are suitable for all investors, and each involves the risk of loss. Swaps trading should only be undertaken by investors who are Eligible Contract Participants (ECPs) within the meaning of Section 1a(18) of the Commodity Exchange Act. Futures and swaps each are leveraged investments and, because only a percentage of a contract’s value is required to trade, it is possible to lose more than the amount of money deposited for either a futures or swaps position. Therefore, traders should only use funds that they can afford to lose without affecting their lifestyles and only a portion of those funds should be devoted to any one trade because traders cannot expect to profit on every trade.

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The information within this communication has been compiled by CME Group for general purposes only. CME Group assumes no responsibility for any errors or omissions. Additionally, all examples in this communication are hypothetical situations, used for explanation purposes only, and should not be considered investment advice or the results of actual market experience. All matters pertaining to rules and specifications herein are made subject to and superseded by official CME, CBOT, NYMEX and COMEX rules. Current rules should be consulted in all cases concerning contract specifications.

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