In March 2023, Mexico took a significant step toward aligning its Over The Counter (OTC) derivatives market with the global Uncleared Margin Rules (UMR) established by BCBS-IOSCO in 2015. Following industry consultations to ensure consistency with international standards, Banco de México introduced requirements for eligible financial institutions and investment funds to exchange initial margin (IM) and variation margin (VM) for non-centrally cleared derivatives. These rules aim to reduce uncollateralised exposures, prevent regulatory arbitrage, and strengthen financial stability by bringing domestic practices in line with globally agreed principles.
The Mexican framework went live on December 31, 2024, with a second phase implemented on September 30, 2025, extending coverage to development banks and corporates. With margin requirements now fully in effect across all in-scope entities, firms must ensure they have the necessary arrangements to comply with the regulations.
Earlier this year, Post Trade Solutions, an LSEG Business, partnered with ISDA to host an in-person roundtable in Mexico City, providing guidance on legal documentation, collateral operations, and the ISDA SIMM model for IM. We also demonstrated how Post Trade Solutions can help validate and benchmark risk models using the Open-Source Risk Engine (ORE). A transparent, peer-reviewed, free-to-access framework for pricing and risk analysis, ORE serves as a reference for benchmarking, validation, training, and teaching, and provides a robust foundation for developing tailored risk solutions.
Since IM volumes in the region remain relatively low, many firms are still under monitoring thresholds. However, those approaching IM thresholds should allow at least six months for preparation, covering IM calculation and reconciliation, legal documentation, custodial agreements, and segregation account set-up to ensure compliance and operational readiness.
Key requirements:
Element |
Requirement |
Details |
|---|---|---|
Scope |
Banks, broker-dealers, development banks, eligible investment funds |
Applies to non-centrally cleared OTC derivatives |
Exchange Threshold |
20,000 million UDIs |
IM/VM required only above this level |
Initial Margin (IM) |
Required above 125 million UDIs per counterparty |
Segregated; no reuse allowed |
Variation Margin (VM) |
Daily exchange required |
Reflects current exposure; no threshold |
Minimum Transfer Amount |
1,250,000 UDIs |
Amounts below MTA need not be exchanged |
Collateral |
Cash & eligible securities |
Haircuts apply; affiliate securities ineligible |
Custody |
Eligible Mexican or foreign custodians |
Legal opinions required for foreign custodians |
Compliance checklist
- Confirm in-scope counterparty classification.
- Ensure VM and IM Credit Support Annexes (CSAs) and Netting Master Agreements are in place.
- Obtain enforceability of legal opinions, particularly foreign law agreements.
- Designate and approve eligible custodians.
- Implement daily margin calculations and messaging workflows.
- Set up collateral management processes, including IM segregation, haircuts, and Minimum Transfer Amount (MTA) logic.
- Ensure capability to calculate, reconcile, and backtest SIMM.
- Test operational readiness, covering margin calls, settlement, and dispute resolution.
- Assess IM liquidity and funding impacts.
- Coordinate with cross-border counterparties on documentation and custody arrangements.
The role of Post Trade Solutions in navigating UMR
Navigating UMR requirements calls for more than compliance. With Post Trade Solutions, firms around the world can build more efficient post-trade processes and:
- Calculate and reconcile Initial Margin (IM), whether SIMM or GRID, seamlessly using industry-standard tools such as IM Exposure Manager.
- Validate and benchmark risk models, including SIMM, with ORE for accuracy and compliance.
- Streamline collateral management and operational workflows through Collateral Manager, ensuring efficiency and transparency.
- Assist firms in maintaining compliance with global and local margin rules, reducing regulatory risk.
- Access 24/7 expert support and guidance throughout your UMR journey for complete peace of mind.
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