July 18, 2019

Rumoured delay to Phase 5 UMR deadline

Rumours are circulating that BCBS / IOSCO will shortly recommend that buy-side firms will be given additonal time to meet the final UMR compliance deadline.

Has anyone noticed the oddness in the EU compliance timeline for the final wave of UMR? The EU AANA measurement period (March to May 2020) is only four months prior to the compliance date in September. All the recommendations we've heard are that firms need up to 18 months to complete their preparations for UMR which makes the EU AANA timing seem confusing. A delay to phase 5 is rumoured.

This piece appeared on-line today which is the first public mention of an industry rumour that Phase 5 of UMR may be moved back a year to avoid chaos. The rush to put in place new agreements, new calculation models and new custody arrangements for up to 9,000 relationships could be a step too far for many buy-side firms to meet the 2020 deadline.

The revised timeline might look like this with the AANA periods kept as-is, but the final deadline moved into 2021.  

The message will be: "Get your homework in on time as we won't tell you again."  In every webinar we've presented the message has been to start early, that advice still stands. 

But Sir! I'm under the 50mm IM threshold!

UMR has a second threshold, that of the 50mm (or see below for your local currency equivalent). By measuring the group-to-group IM amount, some firms may be able to actively avoid the legal and custody aspects of compliance. Every firm must have an IM calculation model in place, whose implementation is then approved (in most jurisdictions) by your regulator.

Once you know the IM per relationship you can adapt your compliance programme accordingly. Your firm would also need active monitoring and management of the IM amounts as once you cross the 50mm compliance is required immediately, with no grace period.

What's your firms thoughts on this rumour? Let us know.


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