Overview

Once considered a routine middle office task, collateral management has now taken centre stage as a key tool to mitigate counterparty, credit and operational risk. The financial crisis re-emphasised the importance of managing counterparty risk and the surrounding operational environment.

With the current regulatory focus on transparency,  counterparty risk and  reporting , there is a growing interests in standardisation, which includes the alignment of various asset classes such as OTC derivatives, triparty repo, securities lending, etcetera. Effective quantification and accurate monitoring of counterparty positions and the capability to extract and report on any relevant position has become more and more crucial in the day-to-day operations of a collateral manager.

Whether you are the exposed party, a triparty agent, outsourced service provider or a supplier of collateral, this solution provides the connectivity, standards and messaging services for all your collateral management transactions. The solution caters to the messaging needs of different collateralisation models such as bilateral, triparty and central counterparty clearing. 

The case for conducting business on an increasingly collateralised basis is growing stronger and more compelling with the globalisation of financial activities. While the risk reduction potential is undisputed, the challenge for players is how to manage efficiency-cost ratios for the business. Enhancing straight-through processing through greater use of automation and common standards is key to addressing this industry challenge.

SWIFT's Collateral Management solution caters for:

• All parties (collateral giver, collateral taker,  agents, service providers)
• All trade-generated exposures (eg OTC derivatives)
• All financing transactions (eg RTG system, securities lending, repos)
• All types of collateral (cash, securities, bank guarantees and others)
• All major instruments and markets
• All models of collateralisation (eg bilateral, triparty, central counterparty clearing)