Collateral Management Under New Regulatory Regimes
Building a Cloud Collateral Platform
Following the 2008 financial crisis and commitments made by G20 countries, a wave of new regulations has demanded new risk practices and process efficiency. Central among these is the adoption of the central clearing for eligible transactions and collateralization of non-eligible ones. As a result of the evolving framework, dealing institutions are becoming increasingly sensitive to the capital impact of clients' derivative activities.
These changes have placed a considerable burden on derivative participants, but present an opportunity for the industry to rethink collateral management processing efficiency and optimization.
Regulations have been changing the way collateral management is considered. These regulations will significantly increase the frequency and quantity of collateral exchanged, resulting in a greater need for firms to proactively manage their collateral demands and associated capital cost.
While these changes unsettle previous practices and render legacy systems insufficient, it presents an opportunity for the industry to collaborate as well as present new solutions to solve for the problematic.