DTCC Connection

Oct 02, 2015 • DTCC Connection

Collateral Conference for the Americas: Co-creating New Best Practices in Evolving Capital Markets

By Jessica York

Collateral Conference for the AmericasRegulatory reform stemming from the financial crisis and the challenge of collateral management provided the backdrop for the September 16 Collateral Conference for the Americas, hosted in New York by DTCC-Euroclear Global Collateral Ltd., the joint-venture between DTCC and Euroclear.

Speaking to more than 170 delegates from across the industry, including the buy-side, sell-side, custodians, market infrastructure experts and policymakers, the Conference provided a forum for the industry to come together and explore how it can collaboratively respond to the regulatory challenges it faces.

International Monetary Fund (IMF) Senior Economist Manmohan Singh, the luncheon keynote speaker, began the event by presenting an analysis of the current state of the financial system and the changing collateral space. He then engaged the audience in a spirited Q&A.

Aite Group Senior Analyst Virginie O’Shea led into the first conference panel by outlining the new research paper: Derivatives Collateral Management: Entering the Industrial Age? The study is the second in a series of two papers that examines the recent developments in derivatives collateral management and is based on interviews with respondents from 34 firms. It highlights internal and external developments for firms active in derivatives markets across the globe.

“The Collateral Revolution: An Unprecedented Paradigm Shift in the Approach to Derivatives Collateral Management” was moderated Ted Leveroni, DTCC-Euroclear GlobalCollateral Ltd. Chief Commercial Officer. Speakers from PricewaterhouseCoopers, BlackRock, Barclays Capital Inc. and AcadiaSoft were also on the panel. They discussed capital requirements and the impact of regulatory changes, as well as how a heightened awareness of risk has led to an unprecedented change in the derivatives collateral management model.

The group also discussed the lack of standards as a challenge for both buy- and sell-side firms. They also addressed the pros and cons of using a utility for collateral management, including which processes should be allocated to a utility and which ones should remain in-house. The session concluded with predictions, and panelists said they expect more standardization of operational processes and further collaboration between market participants.

LGM Financial Consulting’s Managing Principal Oscar Huettner moderated the second panel session, “The Future of Securities Finance: Can the Repo Market Continue to Perform its Traditional Roles in the Post Reform World?”

Panelists from JPMorgan Chase, Morgan Stanley and Barclays Capital discussed trends, challenges, and opportunities in the securities financing world.

The day’s discussions provided a venue for an exchange of ideas and insights on industry developments and an opportunity for the more than 130 attendees to network and connect with peers and other industry practitioners.

In concluding the conference DTCC-Euroclear GlobalCollateral Ltd. Chief Executive Officer Michael Shipton provided attendees with a look into the company’s future plans to pilot its OTC Derivatives solution early next year and launch solutions mid 2016 for both the OTC derivative and financing markets.

About DTCC-Euroclear GlobalCollateral Ltd.:

DTCC-Euroclear GlobalCollateral Ltd is a joint-venture between DTCC and Euroclear, two of the world's largest post-trade infrastructures.

An open architecture infrastructure designed to streamline collateral processing globally, GlobalCollateral provides collateral solutions for derivatives and financing activity, delivering transparency, collateral mobility, efficiency and security through two powerful utilities:

  • The Margin Transit Utility (MTU): enabling straight-through processing of margin calls, mitigating systemic risk and providing improved liquidity and operational risk management.
  • The Collateral Management Utility (CMU): automating collateral management tasks, re-positioning inventory seamlessly across settlement locations, making collateral available wherever and whenever it is needed.

The launch and provision of the Margin Transit Utility and Collateral Management Utility Services remains subject to regulatory approval.

For more information, visit www.globalcollateral.net

Further reading:

The Impact of Collateral: How Collateral’s Rise Will Profoundly Impact Markets

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