Lombard Risk Management has introduced a collateral optimisation module for its COLLINE solution.
COLLINE provides end-to-end, cross-product (OTC derivatives, repo and sec lending) collateral management and clearing.
The module, says Lombard, addresses a changing regulatory environment in which there is increasing demands for collateral in both the cleared and uncleared markets, across all financial products.
John Wisbey, CEO of Lombard Risk, said: “Collateral is simultaneously becoming more expensive and harder to source, creating the so-called ‘collateral squeeze’. COLLINE’s optimisation module enables real-time determination of the most optimal asset to be used, in any scenario, according to user-defined and evolving priorities.”
Lombard Risk COLLINE optimisation module incorporates real-time algorithmic calculation of optimal inventory utilisation and collateral allocations with the aim of improving liquidity by optimising use of all available assets across all business lines; reducing the cost of collateral programmes by calculating ‘cheapest to deliver’/’most expensive to hold’; matching client investment strategies; and bringing the providers and consumers of collateral together using a single technology platform.
The design is intended for use as both a front office and back office tool, for firm-wide and cross-product inventory consolidation and optimisation, and as an integral operational tool to identify the best asset to use in response to a margin event.
Elaine MacAllan, product development for COLLINE at Lombard Risk, said: “Optimisation now appears in most firms’ top 3 strategic priorities, although the business drivers, priorities and definitions of ‘optimal’ vary widely. "
"Accordingly we have focussed on developing a highly configurable rules-based solution, maximising the use of our consolidated inventory management capabilities on a single platform, for the benefit of both the front office from a strategic asset utilisation perspective, and the back office from an operational cost and efficiency standpoint.”
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