HSBC Private Bank is among more than a dozen financial institutions to sign up as early adopters of a new Bloomberg collateral system designed to help firms tackle new margin rules taking effect in March.
Bloomberg said on Wednesday its MARS collateral management programme is meant to assist banks,
investment firms and corporations with the collateral management and
reconciliation processes required to comply with the margin rules that apply to non-cleared swaps in March.
“It's a business imperative to
trade these types of instruments, so compliance too becomes a business
imperative,” said Kpate Adjaoute, managing director at HSBC Private Bank. “We
anticipated these reforms were coming. It helps to centralise the process
and have access to the data we need as well as the counterparties with whom we
The new rules are intended to reduce
systemic risk, but also to lessen the operational and compliance burden for
Phil McCabe, global product manager
for collateral management at Bloomberg, stressed the challenges investors face in the over-the-counter (OTC) derivatives market “cannot be addressed with software
Bloomberg said MARS allows customers
to centralise their collateral management workflow and automate how they manage
and monitor risk exposure and collateral positions.
The new platform offers cross-product,
cross-asset support for Dodd-Frank and European Market Infrastructure Regulation compliance, legal documentation
capture, automated messaging, risk analytics and portfolio reconciliations, according to the firm.
“The need for simplification and
automation of risk and compliance processes has encouraged adoption of
cloud-based technologies and managed services,” said Hugh Stewart, research
director at Chartis Research, a tech consultancy.
Bloomberg also said on Wednesday it has licensed
the standard initial margin model (SIMM) for calculating initial margin to help
trading desks and collateral managers calculate the amount of collateral that
needs to be posted.
Firms in the $200 trillion market for
non-cleared OTC derivatives must adhere to stricter requirements from March.