Response to joint Consultation on draft RTS on risk-mitigation techniques for OTC-derivative contracts not cleared by a CCP

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Question 2. Are there particular aspects, for instance of an operational nature, that are not addressed in an appropriate manner? If yes, please provide the rationale for the concerns and potential solutions.

As above, requiring pension funds and other long-term institutional investors to post and collect variation margin on foreign exchange forward contracts and foreign exchange swaps imposes significant operational as well as cost demands, as well as breaching international consistency with BCBS-IOSCO guidance and the Dodd-Frank requirements. As above, the solution would be explicitly to limit the requirement to post and collect variation margin to contracts between banks and counterparties that are financial institutions and systemically important non-financial entities, defined so as to exclude pension funds and other long-term institutional investors. Please see the attached document “Record Currency Management Limited RTS Risk Mitigation Submission July 2014 Final.pdf” for more detail.

Question 4. In respect of the use of a counterparty IRB model, are the counterparties confident that they will be able to access sufficient information to ensure appropriate transparency and to allow them to demonstrate an adequate understanding to their supervisory authority?

NA

Question 6. How will market participants be able to ensure the fulfilment of all the conditions for the reuse of initial margins as required in the BCBS-IOSCO framework? Can the respondents identify which companies in the EU would require reuse or re-hypothecation of collateral as an essential component of their business models?

NA

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Record Currency Management Limited