Clearstream has announced advances in collateral management automation with the release of a new solution, OSCAR, that applies artificial intelligence (AI) techniques to analyse collateral eligibility profiles for collateral baskets.
The product release, named Own Selection Criteria with Automated Reasoning, has been developed in collaboration with fintech Intelli-Select and their academic partner, the KU Leuven.
This will accelerate the time required for users to develop and negotiate individual collateral baskets through use of AI techniques, including knowledge representation and reasoning (KRR), machine learning and structured natural language processing (NLP).
The service is currently in beta-testing and the main features of the solution will go live during Q4 2022.
This will be implemented through a phased roll out, with basket set up and negotiation becoming available through an initial release in Q3 2022. A second release phase in Q4 will add eligibility checking prior to further upgrades to the service, and additional vendors being brought on board, in early 2023.
The Deutsche Börse-owned post-trade entity believes it is the first collateral management tool available in the market that applies AI techniques in this way to define, create, negotiate and execute baskets of collateral.
Previously, it notes, creating and managing collateral baskets has been a complex and time-heavy process, requiring users to manually review, compare and translate different profiles across multiple triparty agents. These must be constantly updated in accordance with regulatory obligations such as Uncleared Margin Requirements along with changing business needs.
OSCAR is designed to streamline these activities through use of AI, enabling users to define their own intelligent eligibility criteria while screening through an automated process for inconsistencies. Clearstream reports that the tool will also facilitate interoperability with different counterparts, facilitating negotiation, reconciliation and collaboration.
Commenting on the product release, Clearstream head of investor services and financing Samuel Riley says: “OSCAR reduces the time to set up and negotiate an individual fit-for-purpose collateral basket from weeks to hours.
“Like this, Clearstream provides an enormous relief for client operations who can create individual, yet machine-readable collateral baskets to maximise the value of their business’s collateral. With Intelli-Select, we found an excellent partner to build our collateral management vision for the industry, thus supporting our clients in the best way possible.”
Intelli-Select co-founder and CEO Bart Coppens says: “Our solution is built on the latest research in AI techniques enabling the creation of sophisticated insights with full explainability of the reasoning process yet based on intuitive natural language inputs.
“The partnership with Clearstream gives us the opportunity to put these advanced techniques to work, solving real-world issues.”
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