Author: Ted Allen, vice president, collateral management, SunGard
As global regulators introduce new rules and market changes, banks are feeling pressure in every area of their business. One in particular is around collateral management and optimization. A huge liquidity strain and increased demand for collateral assets have brought collateral management to the top of banks’ agendas. But, what is the right collateral management approach in this new regulatory environment?
To answer this very question, we recently published a whitepaper titled Taking the Strain. It outlines a best practice approach to collateral management and optimization.
To respond to new demands, your firm needs a consolidated view of the collateral available across each and every business line. You also must assess the relative costs and quality of all collateral to best match the available assets for each transaction. In short, what your firm needs to know about collateral is this: to better optimize collateral usage, you must take an enterprise-wide approach.
An enterprise-wide approach to collateral management can provide a variety of benefits, from reduced operational risk to better liquidity management, a cross-enterprise view of counterparty risk to funding cost control. This approach also allows for comprehensive reporting to satisfy both internal demands and regulators’ transparency requirements.
Now, as you read through Taking the Strain, try to answer the following questions: Does your firm have a global, holistic, real-time view of all collateral? Are you taking the technological, operational, and cultural steps to optimize your collateral? I look forward to seeing your thoughts in the comments section.
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