WGMR rehypothecation rules unclear and confusing, say lawyers
Final WGMR rules allow collateral on uncleared derivatives to be rehypothecated under strict conditions, but lawyers say they are unclear on how the rules will work in practice
Derivatives users are struggling to make sense of a new rule that will allow dealers to re-use the initial margin posted by clients on uncleared trades, but only under strict conditions. Lawyers say the requirements are unclear, and may not work in some jurisdictions.
The rules are contained within new margin requirements for uncleared derivatives, the final version of which was published on September 2 by the Working Group on Margining Requirements (WGMR), a body run jointly by the Basel
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