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Monday, February 29, 2016

Clearing Things Up with EMNAs

A while back, I listed a number of acronyms relevant in the ERISA/compensation world that I thought were sorta funny.  Examples included SLOBs and STDs.   I've come upon another one.

Bank regulators and the CFTC recently finalized their rules on uncleared swap margin.  One of the provisions provide for the concept of an “eligible master netting agreement”, or EMNA.  Say it quickly.

Here's some background. If a determination regarding the ability to effect certain close-outs is not (or cannot be) made, then the dealer may be required to post and collect certain additional margin.  Going forward, among other changes to what has been dealer practice, margin may need to be collected on a gross basis.

It remains to be seen how the EMNA changes may impact banking/dealer practices where ERISA plans are on the other side.  Or maybe another way to frame the issue is: let's see how everyone's . . . ahem . . . clearing systems are affected by . . . ahem . . . EMNAs.*

* I know - that's just . . . "gross".

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