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When technology intersects with clear purpose: uninterrupted collateral management and how to get there

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Executives from global banks gathered to discuss the latest challenges associated with collateral management and why firms should embrace digital transformation.

The Covid-19 pandemic has highlighted the importance of accelerating sound collateral management capabilities, especially given the recent market stress pushing margin call volumes upwards. What was viewed by many as a painful regulatory exercise, has now been recognised as a valuable risk mitigation tool. The heightened market volatility has pushed collateral management centre stage, exposing vulnerabilities in the daily operations, technology, and data infrastructure of institutions of all sizes, both buy- and sell-side.

The delay by one year of Uncleared Margin Rules (UMR) has enabled the remaining phase 5 and 6 financial institutions to focus on maintaining business continuity and effectively managing risks. It has also provided breathing space for further reflection for some firms as they re-evaluate their broader collateral management needs. Many global institutions, it must be noted, have made good progress, and would have been compliant by September this year, but others have been thrown a valuable lifeline that must not be squandered.

Below are the views of our industry experts - following a recent webinar hosted by | Asia Risk - on collateral management strategies:.


We can clearly see that working from home has had the largest impact, which is probably no big surprise. Interestingly, reporting and collateral shortages were seen to have impacted firms significantly. Encouragingly, it appears that the firms surveyed have largely absorbed the volumes of calls without too much disruption.

The experts reviewed the global collateral management landscape and how Covid-19 affected their firms and the industry. Panellists explained that their firms - Mizuho Bank Tokyo, Citibank HK and DekaBank Frankfurt - all experienced a huge increase in margin calls over a concentrated period, creating intense operational pressure..