What are the challenges and solutions for firms when it comes to collateral management?
Collateral management has emerged in
recent years as arguably the greatest problem facing modern
trading firms but what are the challenges and what are the
solutions, muses Luke Jeffs.
Collateral management is not a new
function. Firms have for decades had to manage their assets to
ensure they were readily available to be posted as security
against trading positions or other commitments to third
But much has changed in the past five
years as the world’s top regulators under the
guise of the G20 have sought to reshape the
world’s financial markets with draconian reforms
designed to curb speculation and force trading firms to shore
up their defences against market shocks.
These measures – some of which
are yet to be introduced in Europe and Asia – were
based on three principles: more and better reporting; more
transparent trading; and the mandatory clearing of some
standardised over-the-counter derivatives such as swaps.
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