DTCC Connection

Nov 26, 2014 • DTCC Connection

Can Standards Take the Pressure Out of Collateral Management?

by Joseph King

Mark Jennis
Mark Jennis, DTCC Managing Director, Strategy and Business Development, and Executive Chairman, DTCC-Euroclear Global Collateral Ltd.

Executives from The Depository Trust & Clearing Corporation (DTCC) participated on high-profile panels focused on key industry trends at the Sibos 2014 Conference in Boston this fall.

In the second of a four-part series, Mark Jennis, DTCC Managing Director, Strategy and Business Development, and Executive Chairman, DTCC-Euroclear Global Collateral Ltd., shares key points from his session, “Can Standards Take the Pressure Out of Collateral Management?”

Next week, Dan Thieke, DTCC Managing Director, General Manager, Settlement and Asset Services, will share topics of discussion from his session, “Standards Directions: What if…? Scenario Planning to Shape the Standards Future Together” in the third part of the series.

The series concludes with Andrew Gray, DTCC Managing Director, Core Business Management, discussing his joint keynote speech on the importance of collaboration among market infrastructures and how it can help drive solutions to resolve current and future industry challenges.

DTCC Connection: Was there consensus among the panelists in your group on how standards can help improve automation, streamline processes and increase transparency in collateral management?

Jennis:
The panelists focused on the role of collateral management standards in their current and future businesses, the regulatory pressure various players face and the impact of collateral management standards on those discussions.

Each panelist explained how collateral management standards are embedded in their business solutions. Agreeing that there is not always one solution for all participants, we each outlined the benefits that can be realized through collateral management standards, including improved straight-through processing (STP); increased velocity of collateral; greater transparency for reporting; and reduced risk. The panelists concluded that standards needed to be thought about more broadly and recognized opportunities to leverage standards from across at least three categories: messaging (e.g., SWIFT instructions); reference data (e.g., Legal Entity Identifiers/Standard Settlement Instructions); and processes (e.g., margin calculation, collateral management).

Regulatory pressure, particularly surrounding collateral reporting and asset protection, poses a challenge because of the differences between regions and jurisdictions. These differences make it difficult to harmonize reporting and asset protection protocols. Despite these challenges, we see opportunities to leverage standards to advance regulatory initiatives such as processes for segregation of client assets. Panelists urged audience members to be proactive and collaborative in working with the various constituents to develop standards that help support strategic solutions for the industry.

Related reading:
Sibos session: “Market Infrastructure Resiliency”, Donna Milrod, DTCC Managing Director and Chief Administrative Officer

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