Initial margin: the FBF publishes a new documentation organising the exchanges of initial margin

In the context of the entry into force in September 2022 of the obligation to exchange initial margin for counterparties classified as “Phase 6” counterparties pursuant to Regulation (EU) no. 648/2012 of 4 July 2012 (EMIR), as amended, and of its delegated regulation, the FBF publishes a new documentation organising the exchanges of initial margin.

The FBF publishes three sets of documentation depending on the identity of the custodian designated by the parties:

1. A new version of the Master Pledge Agreement (IM), originally published in 2016
   The Master Pledge Agreement (IM) is governed by French law and is intended to create pledges over securities accounts and/or bank account pledges to enable the parties to comply with their regulatory obligation to exchange initial margin. These pledges will be perfected by the execution of subsequent agreements governed by the law of the country in which the pledged accounts are located (lex rei sitae). Templates of pledge over securities account and cash account pledge governed by French law are attached to the Master Pledge Agreement (IM). The Master Pledge Agreement (IM) is agnostic as to the identity of the custodian. It is published in English and French.
   
   
2. Documentation to be used in relation to a pledged account opened in the books of Euroclear
   Like the ISDA/Euroclear documentation, this documentation comprises two documents: the Collateral Transfer Agreement, which is governed by French law and organises, in particular, the terms and conditions for calculating and exchanging initial margin, and a Security Agreement, which is governed by Belgian law and creates and perfects the security interest on the pledged account. This documentation is drafted in English.
   
   
3. Documentation to be used in relation to a pledged account opened in the books of Clearstream
   Like the ISDA/Clearstream documentation, this documentation comprises two documents: the Collateral Transfer Agreement, which is governed by French law and organises, in particular, the terms and conditions for calculating and exchanging initial margin, and a Security Agreement, which is governed by Luxembourg law and creates and perfects the security interest on the pledged account. This documentation is drafted in English.

The FBF was assisted by Jones Day in the management of this project. The Luxembourg documentation was drafted with the assistance of Arendt & Medernach (Luxembourg) and the Belgian documentation with Jones Day (Brussels).

The linked documents are derived, in part, on materials copyrighted by the International Swaps and Derivatives Association, Inc., whose registered trademark is ISDA®. Any reproduction or distribution of these documents – other than for the purpose of documenting a specific transaction – that is not otherwise expressly authorized in writing by the Association is prohibited. By downloading these documents you agree and represent that you will use them only for such purposes and that you will not reproduce them or distribute them for any other purpose.

Documents for download updated on March 31, 2022: