In this paper, Bridging the Collateral Divide, BNY Mellon and Euroclear examine the contours of the global collateral marketplace and explore ways to improve it for all participants. We believe that harmonisation of processes would significantly reduce fragmentation and enable increased mobility in international collateral management.
Given our different vantage points, we are uniquely positioned to see activity occurring today that is suboptimal for users of the marketplace. That has enabled us to identify several aspects of the current structure that all market participants, operators and end users alike might wish to change in order to have collateral usage be more efficient and effective. Given the focus on the optimisation of financial resources across the industry, we think it is timely to provide our perspective and to try to start the conversation in order to help initiate change.
Our analysis suggests there is potential for increased efficiencies in the deployment of collateral if there is greater industrywide standardisation and a more holistic approach to the efficient deployment of collateral.
This paper concludes by outlining a number of steps that stakeholders in the collateral management industry could commence work on to harmonise the collateral landscape and increase market efficiency.