6th annual collateral management conference: Stand by your plan
24 October 2012 Amsterdam
Image: Shutterstock
Amsterdam’s opulent Hotel Okura was the backdrop for Fleming Europe’s 6th annual collateral management conference. The event invited industry professionals—from asset managers to insurance companies—to interactively debate, network, and more importantly, discuss the issues that have been keeping them awake at night.
An interactive panel discussion, which included, Helen Nicol of Lombard Risk, Ted Allen of Sungard, Ted Leveroni of Omgeo, Neil Murphy of IBM and Christophe de la Bastide of Misys, focused on collateral optimisation and what firms need to do to centralise their collateral into a collateral hub.
For Bastide, having a good inventory is key in order to distinguish between collateral types. He said that firms need a “decision making tool to decipher what is eligible for collateral”. But collateral managers “don’t want an automated process—they want to make their own decisions”, he added.
On the collateral hub, Leveroni encouraged firms to “get [their] arms around the whole collateral pool”. He said that taking a broad and holistic route would offer the smartest outcome.
The panel went on to discuss the enterprise-wide collateral management strategies that firms have been forced to adopt in light of the financial crisis and regulatory reform.
Despite the inherent drawbacks of the siloed approach, Allen said that “optimising within a single silo is better than not optimising at all”.
Nicol gave an insight into the transformation that collateral management has undergone at many firms. She said: “Looking at the whole front/back process, we are seeing collateral management move from a back office or operations function towards a front-office role in a lot of areas.”
The afternoon offered firms the opportunity to look at what they are doing wrong in collateral management through an interactive workshop. Rule Financial’s executive director, David Field, and its principal consultant, Alec Nelson, ran a collateral management and regulatory change workshop that focused on key business and technology changes.
The workshop commenced with a round of interactive voting to establish firms by type, geographical location and value of collateral assets. Field then reviewed the regulatory drivers of change, from the European Market Infrastructure Regulation to the Foreign Account Tax Compliance Act, and the “overwhelming number of challenges” that companies face.
Throughout the workshop, the main objective was to help firms evaluate their state of readiness against their peers, and decipher which issues were in need of addressing.
In order to assess readiness, Field introduced the ‘three peaks challenge’. Firms were invited to vote on where they felt they ranked under three categories—foundation, management and optimisation.
Once firms understood their level of readiness, Field discussed the importance of technology and the key role that it plays in collateral management and regulatory change. He said: “Systems and technology solutions are necessary to support all of the transaction flows and business processes that take place”.
Field went on to stress how quickly market infrastructure is changing and the importance of installing new technology platforms. He said that most institutions have aging systems that aren’t equipped to handle the imminent changes.
Field warned: “Many systems were designed to support specific products and are therefore not well suited to cross-product requirements … Technology risks will be high for the foreseeable future and the sheer volume of change required to systems [will increase] the chance of errors being introduced.”
To combat the technological inferiority of some firms, Field emphasised the importance of choosing the right vendor system to suit an institution. He explained: “Different vendor systems have different collateral management strengths and weaknesses. It is important to understand your business requirements before looking for a technology solution.”
Field concluded the workshop with the ‘collateral clinic’ in which firms took it in turns to highlight the three main concerns that they face as collateral and regulatory demands draw closer.
An interactive panel discussion, which included, Helen Nicol of Lombard Risk, Ted Allen of Sungard, Ted Leveroni of Omgeo, Neil Murphy of IBM and Christophe de la Bastide of Misys, focused on collateral optimisation and what firms need to do to centralise their collateral into a collateral hub.
For Bastide, having a good inventory is key in order to distinguish between collateral types. He said that firms need a “decision making tool to decipher what is eligible for collateral”. But collateral managers “don’t want an automated process—they want to make their own decisions”, he added.
On the collateral hub, Leveroni encouraged firms to “get [their] arms around the whole collateral pool”. He said that taking a broad and holistic route would offer the smartest outcome.
The panel went on to discuss the enterprise-wide collateral management strategies that firms have been forced to adopt in light of the financial crisis and regulatory reform.
Despite the inherent drawbacks of the siloed approach, Allen said that “optimising within a single silo is better than not optimising at all”.
Nicol gave an insight into the transformation that collateral management has undergone at many firms. She said: “Looking at the whole front/back process, we are seeing collateral management move from a back office or operations function towards a front-office role in a lot of areas.”
The afternoon offered firms the opportunity to look at what they are doing wrong in collateral management through an interactive workshop. Rule Financial’s executive director, David Field, and its principal consultant, Alec Nelson, ran a collateral management and regulatory change workshop that focused on key business and technology changes.
The workshop commenced with a round of interactive voting to establish firms by type, geographical location and value of collateral assets. Field then reviewed the regulatory drivers of change, from the European Market Infrastructure Regulation to the Foreign Account Tax Compliance Act, and the “overwhelming number of challenges” that companies face.
Throughout the workshop, the main objective was to help firms evaluate their state of readiness against their peers, and decipher which issues were in need of addressing.
In order to assess readiness, Field introduced the ‘three peaks challenge’. Firms were invited to vote on where they felt they ranked under three categories—foundation, management and optimisation.
Once firms understood their level of readiness, Field discussed the importance of technology and the key role that it plays in collateral management and regulatory change. He said: “Systems and technology solutions are necessary to support all of the transaction flows and business processes that take place”.
Field went on to stress how quickly market infrastructure is changing and the importance of installing new technology platforms. He said that most institutions have aging systems that aren’t equipped to handle the imminent changes.
Field warned: “Many systems were designed to support specific products and are therefore not well suited to cross-product requirements … Technology risks will be high for the foreseeable future and the sheer volume of change required to systems [will increase] the chance of errors being introduced.”
To combat the technological inferiority of some firms, Field emphasised the importance of choosing the right vendor system to suit an institution. He explained: “Different vendor systems have different collateral management strengths and weaknesses. It is important to understand your business requirements before looking for a technology solution.”
Field concluded the workshop with the ‘collateral clinic’ in which firms took it in turns to highlight the three main concerns that they face as collateral and regulatory demands draw closer.
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