Without doubt regulation has driven a dramatic increase in the volume and uses of collateral in recent years. Collateral optimisation became the industry buzzword and over the next couple of years, the story is only going to get bigger. The Basel III Endgame and Global Systemically Important Bank (GSIB) surcharge changes will focus people’s minds on balance sheet and capital, even more so than in recent years. The upcoming clearing mandate in the US Treasury market will also be a major driver of change.
Advances in post-trade, triparty and collateral
Euroclear will be speaking on the ‘Advances in post-trade, triparty and collateral’ panel at the Finadium Rates and Repo North America conference on 29 October 2024.
To mark the occasion, an interview was conducted by Finadium ahead of the event to set the scene for what it looks to be a very engaging panel discussing recent changes in Collateral management.
Triparty agents such as Euroclear are seeing increased demand from clients for collateral data and requests for direct allocation of collateral to supplement the automated collateral-allocation tools provided. Some clients now take data to feed their own optimisation algorithms and then direct allocations to their triparty agent.
Triparty agents have embraced data transparency, making collateral data available to third-party platforms via APIs, which has led to growth in third-party platforms offering collateral management services.
The ability to do collateral optimisation based on client-identified factors across triparty agents is real and available. Collateral data is now portable and available thanks to each triparty agent making it available via APIs, opening up the potential for clients. Whether doing it in house, or using third-party platforms, collateral optimisation has moved from buzzword to reality.
The next challenge is the one of interoperability. Data availability means there are countless parameters for collateral optimisation across triparty agents and interoperability is the pinch point, especially across differing regions and time zones. Progress has been rapid, so it’s a challenge the industry is working hard at overcoming.
Read the full article here > Rates & Repo in NY: advances in post-trade, triparty and collateral – Finadium
