Bloomberg signs HSBC for new collateral system

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 andreconciliation processes required to comply with the margin rules that apply to non-cleared swaps in March.

“It's a business imperative totrade these types of instruments, so compliance too becomes a businessimperative,” said Kpate Adjaoute, managing director at HSBC Private Bank. “Weanticipated these reforms were coming. It helps to centralise the processand have access to the data we need as well as the counterparties with whom wetrade.ˮ

The new rules are intended to reducesystemic risk, but also to lessen the operational and compliance burden forinvestors.

Phil McCabe, global product managerfor collateral management at Bloomberg, stressed the challenges investors face in the over-the-counter (OTC) derivatives market “cannot be addressed with softwarealone".

Bloomberg said MARS allows customersto centralise their collateral management workflow and automate how they manageand 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 documentationcapture, automated messaging, risk analytics and portfolio reconciliations, according to the firm.

“The need for simplification andautomation of risk and compliance processes has encouraged adoption ofcloud-based technologies and managed services,” said Hugh Stewart, researchdirector at Chartis Research, a tech consultancy.

Bloomberg also said on Wednesday it has licensedthe standard initial margin model (SIMM) for calculating initial margin to helptrading desks and collateral managers calculate the amount of collateral thatneeds to be posted.

Firms in the $200 trillion market fornon-cleared OTC derivatives must adhere to stricter requirements from March.