Stabilized initial margin with a catch – Understanding the impact of SIMM recalibration

By Jacob Ullman, Business Development

Recent increases in market volatility have fueled an increase in the costs of trading, specifically the collateral held due to bi-lateral initial margin (IM) on OTC transactions. While IM exposure has stabilized overall, certain risk factors have risen significantly due to the annual recalibration in December 2022.

Acadia has estimated for parts of its client base an increase of around 6% in the cost of margin, but with some risk factors causing up to a 50% increase in exposure in some areas.

This article covers:

• Stabilization of Overall ExposureLevels
• Increased Exposure Levels ofSpecific Risk Factors
• Outlook: Managing Risk

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