The challenges of Smart Contract implementation Self-execution of contracts How do you: • Address the margining of the position, given the contract typically says, effectively, “you, the client, will pay much whatever margin I ask for, whenever I ask for it”? • Deal with the default of the client? • Deal with the default of the clearing broker, given the default management procedures of the clearing house will have a direct impact on what happens to the trade between the clearing broker and the client? • Ensure that your automated margin call mechanisms integrate into your client money/client asset compliance regime? • Document and operate margin transformation services? • Address cross-product margining? • Deal with set-off and indemnities? • Address post-trade regulatory change, to the extent it impacts on the derivatives entered into under the agreement? UNRESTRICTED 68