Why Your Company Needs a Collateral Management System

Post-crisis regulatory reform is driving a critical need for an advanced collateral management system. The parallel implementations of the Basel III capital adequacy and liquidity framework and the far reaching over-the-counter derivatives markets reforms create a substantial collateral squeeze.

Standardized derivative should be cleared through central counterparties, and higher capital charges and onerous margin requirements will apply for non-cleared derivatives. Aside from the massive growth in margin requirements, the demand for high quality securities is further fueled by the drying up of unsecured money markets and Basel III’s requirement that banks hold a substantial liquid assets buffer to meet the liquidity coverage ratio.

A collateral management system offers in an innovative technology solutions for enterprise-wide collateral management and optimization. The collateral management system will help financial institutions make the most use of their collateral assets and handle the ever-increasing volume and complexity of collateralized trading activities.

If you are a broker-dealer, investment bank, clearing house, asset manager, custodian or insurance company, a collateral management system will help you create a sustainable competitive advantage in the collateralized trading business by:

  • Centralization the management, optimization and trading of collateral in one profit center on a single platform
  • Reduction the cost of funding collateral by optimizing the allocation of collateral to the various requirements
  • Avoiding collateral sitting and improving revenues through proactive collateral trading in the collateral management system
  • Complying with the OTC market reform regulations and handling the margining processes for bilateral and cleared trades
  • Achievement of operations efficiency through automated cross-product collateral operations in the collateral management system

If you are considering getting a collateral management system for your company, make sure that you only get the software from a reputable brand that has proven themselves time and time again to provide their customers with only the best solutions for their business.