We are a specialist consultancy that accelerates high-quality change within collateral and related domains.
We are the industry experts for Initial Margin solution definition and delivery, across the end-to-end set of changes imposed (Calculations, Operations, Custodian and Legal change). We have accelerated the IM changes for firms throughout all IM phases. Our clients for IM work include Tier 1 Dealer banks, smaller banks, buy-side firms, custodians and market vendors.
It’s well-known that the compliance objectives for Phase 5 and 6 firms are very different to the Dealer banks that went live in the early phases of Initial Margin. These objectives are driven by limited internal resources and budget, but also the huge volume of new, in-scope firms for Phases 5 (~300) and 6 (~800). Industry queues are inevitable at legal teams, custodians and vendors.
As a result, the most frequent compliance objectives we hear for Phase 5 and 6 firms are led by the desire to minimise the impact of their IM delivery, including:
1. No interruption to trading
2. Reduced and removed compliance scope
3. Accelerated delivery, to beat the industry queues
4. Minimised cost and time impact
IM compliance challenges are typically two-fold.
Firstly, Phase 5 and 6 firms will all face heavy internal and external challenges and constraints, per the illustration above. Limited internal resources, time and IM expertise, combined with huge industry queues and bottlenecks, will put compliance plans at risk.
Secondly, there is often an overwhelming amount of information that must be interpreted by all in-scope firms throughout their IM delivery, related to regulations, vendors, market practice and more.
When combined, these two things make it difficult for in-scope firms to make a series of important decisions with the best outcomes, in a timely manner.
The end result is that Phase 5 and 6 firms run the risk of a slow and expensive delivery, with the following outcomes:
1. Being stuck in multiple industry queues
2. Restricted or interrupted trading, driven by not being operationally-ready for collateral exchange
3. High upfront and ongoing costs for the new IM operating model
4. Ill-suited decisions and IM solutions
5. Non-compliance and subsequent regulator penalties
IM Lite is Tonic’s new service to help Initial Margin Phase 5 & 6 firms make the right decisions, quickly.
At its core IM Lite is an industry-leading IM advisory one-stop-shop, available as a flexible, low-cost retainer service. We accelerate all key decisions by tailoring our end-to-end IM expertise, built up over all previous phases, to our client’s bespoke set of circumstances, obstacles and risks.
We also open up our wide industry network to our clients - including vendors, custodians, legal firms and dealers, to further accelerate and protect their IM delivery.
The end result? Leveraging Tonic’s expertise enables our clients to make the right decisions for their needs.
In turn, clients will maximise the likelihood of achieving their key compliance objectives, such as an accelerated delivery, no interruption to trading strategy, minimised costs and therefore maximised profits.