Brexit to have negative affect on collateral management harmonisation
16 May 2019 London
Image: Shutterstock
Over half, 52 percent, thought that having London outside the EU will have a negative impact on collateral management harmonisation, according to those surveyed at Vermeg’s Annual Collateral Management Conference.
The survey found that 15 percent said they didn’t feel there would be a negative impact, while 33 percent said that they were unsure.
Discussing harmonisation, one speaker said that the main purpose of Eurosystem collateral management system (ECMS) is to harmonise and create cost savings.
ECMS will see the national central banks move their 19 different national collateral management systems (CMS) into a single collateral management system, which will cover the whole of Europe.
The panellist explained that a single system for monetary policy will save costs.
Discussing the deadline of the ECMS implementation, the moderator asked that with the deadline to comply in 2022, how far are firms in terms of implementation and what do counterparties need to do to be ready?
In response, one panellist said: “In order to have this single environment of securities, cash and collateral on the euro system bill we need first consolidate our securities.”
The moderator also asked if panellists thought the deadline will be pushed back. One speaker said: “The CSDs are accepting this challenging calendar but for the rest of the industry it is not so easy as some do not yet know what ECMS is.”
Another panellist added: “ECMS is targeting the monetary policy of the central banks of the Eurosystem. ECMS will only heavily impact banks of the 19 CMSs, it will not cause a direct impact for non-Euro banks.”
The survey found that 15 percent said they didn’t feel there would be a negative impact, while 33 percent said that they were unsure.
Discussing harmonisation, one speaker said that the main purpose of Eurosystem collateral management system (ECMS) is to harmonise and create cost savings.
ECMS will see the national central banks move their 19 different national collateral management systems (CMS) into a single collateral management system, which will cover the whole of Europe.
The panellist explained that a single system for monetary policy will save costs.
Discussing the deadline of the ECMS implementation, the moderator asked that with the deadline to comply in 2022, how far are firms in terms of implementation and what do counterparties need to do to be ready?
In response, one panellist said: “In order to have this single environment of securities, cash and collateral on the euro system bill we need first consolidate our securities.”
The moderator also asked if panellists thought the deadline will be pushed back. One speaker said: “The CSDs are accepting this challenging calendar but for the rest of the industry it is not so easy as some do not yet know what ECMS is.”
Another panellist added: “ECMS is targeting the monetary policy of the central banks of the Eurosystem. ECMS will only heavily impact banks of the 19 CMSs, it will not cause a direct impact for non-Euro banks.”
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