SIFMA AMG Publishes "Derivatives Package" Template for Use When Onboarding Clients
SIFMA's Asset Management Group ("SIFMA AMG") published a template client document that asset managers can use to comply with new information and disclosure obligations required when onboarding clients for derivatives transactions.
The "Derivatives Package" includes a cover letter, a Derivatives Trading Client Questionnaire, a Derivatives Authorization, and a list of regulatory definitions used in the documents. Client completion and signing of the Derivatives Package provides asset managers with authority to set up an account for trading on the client's behalf, to make required representations, and to adhere to the relevant industry protocols without disruption of the management of the client's account.
Commentary
This is a useful package for managers who find themselves subject to continuing information requests in connection with entering into derivatives on behalf of their clients. It's also a good piece of evidence of the downstream issues raised by the swaps regulatory framework, which ostensibly applies only to swap dealers and major swap participants. Those regulated entities are required to seek detailed information from their counterparties. Such counterparties are often represented by asset managers who are, in turn, forced to repeatedly reach out to their clients for the relevant information.