Intercontinental Exchange Inc (NYSE:ICE), an international network of exchanges and clearing houses, today announced that its subsidiary ICE Benchmark Administration (IBA) was selected by the International Swaps and Derivatives Association, Inc. (ISDA) to build and operate the crowdsourcing utility for the ISDA Standard Initial Margin Model (ISDA SIMM).
ISDA made its choice after an extensive selection process which commenced in July this year. IBA plans to roll out the crowdsourcing utility before the new margin rules for non-cleared derivatives come into effect on September 1, 2016.
The ISDA SIMM is a common methodology for the calculation of initial margin requirements for non-cleared derivatives. It has been developed as part of ISDA’s Working Group on Margin Requirements (WGMR) implementation initiative to help market participants comply with new margin rules for non-cleared derivatives.
IBA will build a service that covers the aggregation and compilation of risk data to enable market participants to implement the ISDA SIMM™ consistently. It will have to ensure that consensus results are used for the margin model’s risk buckets and weightings. ISDA will oversee the crowdsourcing utility, whereas IBA will work with ISDA to establish a new governance framework for the administration of the solution.
Finbarr Hutcheson, President, ICE Benchmark Administration said:
“We are delighted to have been selected to build and operate the new crowdsourcing utility for the ISDA SIMM™, which is a reflection of the trust the market has in our independent, robust governance structure. The service will allow the OTC trading community to leverage our purpose built technology. This solution is already used extensively for interest rates and precious metals and will be extended to cover margin data for non-cleared derivatives. Our experience in reforming and launching benchmarks will help ensure a seamless implementation for the ISDA SIMM™ crowdsourcing utility.”
Since its launch in 2013, IBA has grown as one of the world’s most experienced and trusted providers of regulated benchmarks. IBA currently administers ICE LIBOR, LBMA Gold Price and ICE Swap Rate.
To view the official announcement from ICE, click here.