Collateral Management

Today collateral is the principal means of access to financing for commercial banks. Effective collateral management requires unique blend of skills, which requires firms make data-driven decisions to collateral managers attract, retain, reward and deploy the best talent. Firms must invest where it counts with clients and contain costs.

Challenges in the Current Landscape Require Unique Talent

Central banks only lend against the highest quality collateral. The collateralised financing of banks by other banks grew rapidly in the prelude to the financial crisis, which erupted in 2007, mostly in the repurchase (or repo) markets. However, since the crisis the funding of banks in the inter-bank market has given way to the collateralized financing of banks by central banks.

In response to the financial crisis, regulatory measures have further enlarged the appetite of the banking industry for collateral eligible at a central bank. Measures taken in the Dodd Frank Act and the European Market Infrastructure Regulation (EMIR) have shifted the majority of OTC derivatives business from bi-lateral trading to markets supported by central counterparty clearing houses (CCPs). To manage counter[party risk, CCPs oblige their participants to post collateral. Counterparties to non-cleared OTC derivatives are also obliged to post collateral to each other, under a separate set of measures drawn up by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO).

These multiple demands for eligible collateral have sparked concern that there will be a shortage. To mitigate that threat, a network of global custodian banks and financial market infrastructures (FMIs) is developing services to make it easier to move eligible collateral quickly and easily from wherever it is to wherever it is needed.

To develop and build the links between FMIs and financial institutions and deliver collateral management services at prices banks and fund managers can afford, firms require an unusual blend of leadership, technical, compliance, operational, technological, and sales and marketing skills.

Attract, Retain, and Engage Top Talent

We work with clients to provide strategic insights and up-to-date information enabling clients to:

  • Attract top talent with key skills such as data curation and design competitive total rewards programs
  • Manage costs and identify investment priorities based on in-depth competitive analyses
  • Understand customer needs, receive client feedback on service quality, and address service gaps

Collateral Management Firm Business Intelligence

Our team provides a comprehensive set of surveys that support decision making at all levels. Our surveys include:

  • Compensation in CCPs
  • Compensation in CSDs
  • Compensation  in Securities Lending, Financing, and Collateral Management
  • Customer Satisfaction in Collateral Management Services
  • Customer Satisfaction in Securities Lending
  • Customer Satisfaction in Tri-Party Securities Financing