CMF: Buy side must manage from the front
21 October 2016 Amsterdam
Image: Shutterstock
Buy-side firms must come round to the idea of including their front offices in all aspects of their collateral management programmes, conference delegates heard.
A seasoned panel of industry experts at the Fleming Collateral Management Forum explained that, as transaction costs caused by new regulations are being passed along to the buy side, those firms need to cut their own costs and become more efficient to mitigate these factors.
“Buy-side firms need to become more efficient and make this [joint management] happen,” said a well-known industry consultant.
“Without the front office calculations along with the post-trade data analysis, you cannot really know what your collateral is costing you,” the panellist added.
Another panellist representing one of the largest banks in the market stated that the collateral programme is every bit as much the business of the bank's front office as the back.
“Collateral management cannot be limited to the back office and they [the buy side] need the sophisticated attention of the front office,” said the banking representative.
When the question of where responsibility for collateral management lies was put to the audience, however, only 30 percent claimed their front office was 'closely involved' in the function, with a further 32 percent admitting it was only 'limited involvement'.
Twelve percent said their front offices had no involvement at all.
Reacting to the poll, one panellist claimed that, although these figures showed the industry had a long way to go, it was a vast improvement on when the same question was posed during the conference five years ago.
Another consultant panellist stated that collaboration between the buy side, and with utility companies, "will become a big part" of the solution going forward.
A seasoned panel of industry experts at the Fleming Collateral Management Forum explained that, as transaction costs caused by new regulations are being passed along to the buy side, those firms need to cut their own costs and become more efficient to mitigate these factors.
“Buy-side firms need to become more efficient and make this [joint management] happen,” said a well-known industry consultant.
“Without the front office calculations along with the post-trade data analysis, you cannot really know what your collateral is costing you,” the panellist added.
Another panellist representing one of the largest banks in the market stated that the collateral programme is every bit as much the business of the bank's front office as the back.
“Collateral management cannot be limited to the back office and they [the buy side] need the sophisticated attention of the front office,” said the banking representative.
When the question of where responsibility for collateral management lies was put to the audience, however, only 30 percent claimed their front office was 'closely involved' in the function, with a further 32 percent admitting it was only 'limited involvement'.
Twelve percent said their front offices had no involvement at all.
Reacting to the poll, one panellist claimed that, although these figures showed the industry had a long way to go, it was a vast improvement on when the same question was posed during the conference five years ago.
Another consultant panellist stated that collaboration between the buy side, and with utility companies, "will become a big part" of the solution going forward.
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