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  2. ISDA SIMM®
The ISDA Standard Initial Margin Model (ISDA SIMM®) is an industry standard methodology for calculating regulatory initial margin for non-cleared derivatives.  
The ISDA Standard Initial Margin Model (ISDA SIMM®) is an industry standard methodology for calculating regulatory initial margin for non-cleared derivatives.  

Key Benefits

Under new margin rules for non-cleared derivatives, in-scope entities need to exchange initial margin on most non-cleared derivatives, but delays and disputes can occur if the two parties to a trade don’t agree on the margin amount.

The ISDA SIMM® sets a common methodology that all market participants can use for their initial margin calculations, reducing the costs that would be incurred if each firm developed its own model from scratch and cutting the potential for disputes. The ISDA SIMM® governance framework establishes common practices to ensure margin sufficiency, in line with global margin requirements for non-cleared derivatives.

 

Contact

To license the ISDA SIMM®, please visit the ISDA SIMM® Licensing FAQ. Parties that became subject to non-cleared margin requirements on or after September 1, 2021 can adopt a streamlined licensing agreement for no fee. For questions about ISDA SIMM® licensing, please contact IsdaLegal@isda.org.

 

About the ISDA SIMM

Regulators around the globe have introduced rules requiring in-scope entities (those with an aggregate average notional amount of non-cleared derivatives above €8 billion) to meet certain margining obligations. For those in-scope counterparties required to exchange initial margin on their non-cleared derivatives, it’s vital that their respective margin calculations match to avoid costly interruptions to trading.

The ISDA SIMM® was launched ahead of the first phase of the initial margin rules in September 2016, and is subject to a regular calibration and backtesting exercise, in line with regulatory requirements.

The model is overseen by an industry governance committee and is subject to a transparent governance framework.

The ISDA SIMM® is available to ISDA members and non-members, subject to a license. Vendors can also license the methodology to offer ISDA-SIMM®-related services, such as initial margin calculation, initial margin optimization, backtesting and Common Risk Interchange Format (CRIF) generation. Contact IsdaLegal@isda.org for more information.

Further detail is available on the ISDA website.

 

Key Features

  • Transparent, industry standard methodology.
  • Mitigates the risk of disputes with counterparties over margin calculations.
  • Subject to an annual calibration and backtesting exercise with the potential for off-cycle calibrations following periods of stress to maintain the robustness of the model (the model will move to semiannual calibration from 2025).
  • Subject to oversight by an industry governance committee comprising ISDA SIMM®
  • Supported by a robust governance framework with standard practices for bilateral remediation to ensure regulatory compliance.

 

Licensed Vendors

Here is the list of vendors that offer services based on ISDA SIMM®:

ISDA SIMM® Licensed Vendors – International Swaps and Derivatives Association

 

Fact Sheets/Presentations

 

Press Releases/Blogs