SFTS: Tokenisation is going to shift collateral management
04 November 2021 UK
Image: WrightStudio/stock.adobe.com
Tokenisation is going to shift collateral management from being reactive, as it typically is today, to being a lot more proactive, says a panellist at the Securities Finance Technology Symposium.
In a panel moderated by Jonathan Adams, managing principal of securities finance and collateral management at Delta Capita, the subject of collateral management and optimisation was discussed. Several industry experts touched on the involvement and impact of the Central Securities Depositories Regulation (CSDR) in the collateral space.
Panellists included Ted Allen, director of business development, securities finance and collateral at FIS Global; Wassel Dammak, head of collateral solutions strategy at Vermeg; Gabi Mantle, post-trade product specialist at EquiLend; Alan Sheehan, product management director at Adenza; and Martin Walker, head of product management, SFCM at Broadridge.
One panellist explains: “CSDR is going to help get to a more proactive stance by forcing improved visibility across future settlement ladders. In order to ensure minimal impact of CSDR fines, firms need to understand what their settlement management looks like. It’s going to facilitate a much more accurate view of inventory in terms of your projected and settled inventory.”
The panellist continues to say that the use of CSDR will help bring improved settlement rates, facilitating more accurate views of that inventory. In order for this to work, the industry needs more standardisation, however, it was noted that there is not yet a consensus on what that standardisation looks like.
Pushing the agenda forward, another panellist notes: “UMR has been a big driver for collateral transformation, one of the reasons we want to talk about tokenisation is that the demand for collateral for initial margin would be met better if it was easier to do collateral transformation.”
In support of this statement, a panellist recognises UMR as one of the drivers within the collateral space in recent times.
They explain: “There is certainly much more demand as a result of UMR, more collateral need means increased collateral transformations, increased trading activity adds pressure to both trading desks and also operational teams. We do need as an industry to be able to mobilise and facilitate that increase in collateral movements and the demand is only expected to increase over the next six, 12, 18 months.”
A point of concern that was pinpointed by the panel, circled around the impact buy-side firms now face from UMR Phase 5 and 6. Despite these firms needing to transform collateral, they do not necessarily have the tools to do this.
However, there is said to be automated platforms, solutions and technology available to firms in order to facilitate this.
During the panel's final thoughts on the discussion of collateral management, one panellist says: “One of the key things that has come out, particularly when we look at securities lending, is how many of these trends are driving a convergence of trading and collateral management.”
The adoption of standardisation and automation is imperative in order to support these changing demands, says another panellist.
And a third concludes: “Securities finance and collateral management are two sides of the same coin that need to be looked at together.”
In a panel moderated by Jonathan Adams, managing principal of securities finance and collateral management at Delta Capita, the subject of collateral management and optimisation was discussed. Several industry experts touched on the involvement and impact of the Central Securities Depositories Regulation (CSDR) in the collateral space.
Panellists included Ted Allen, director of business development, securities finance and collateral at FIS Global; Wassel Dammak, head of collateral solutions strategy at Vermeg; Gabi Mantle, post-trade product specialist at EquiLend; Alan Sheehan, product management director at Adenza; and Martin Walker, head of product management, SFCM at Broadridge.
One panellist explains: “CSDR is going to help get to a more proactive stance by forcing improved visibility across future settlement ladders. In order to ensure minimal impact of CSDR fines, firms need to understand what their settlement management looks like. It’s going to facilitate a much more accurate view of inventory in terms of your projected and settled inventory.”
The panellist continues to say that the use of CSDR will help bring improved settlement rates, facilitating more accurate views of that inventory. In order for this to work, the industry needs more standardisation, however, it was noted that there is not yet a consensus on what that standardisation looks like.
Pushing the agenda forward, another panellist notes: “UMR has been a big driver for collateral transformation, one of the reasons we want to talk about tokenisation is that the demand for collateral for initial margin would be met better if it was easier to do collateral transformation.”
In support of this statement, a panellist recognises UMR as one of the drivers within the collateral space in recent times.
They explain: “There is certainly much more demand as a result of UMR, more collateral need means increased collateral transformations, increased trading activity adds pressure to both trading desks and also operational teams. We do need as an industry to be able to mobilise and facilitate that increase in collateral movements and the demand is only expected to increase over the next six, 12, 18 months.”
A point of concern that was pinpointed by the panel, circled around the impact buy-side firms now face from UMR Phase 5 and 6. Despite these firms needing to transform collateral, they do not necessarily have the tools to do this.
However, there is said to be automated platforms, solutions and technology available to firms in order to facilitate this.
During the panel's final thoughts on the discussion of collateral management, one panellist says: “One of the key things that has come out, particularly when we look at securities lending, is how many of these trends are driving a convergence of trading and collateral management.”
The adoption of standardisation and automation is imperative in order to support these changing demands, says another panellist.
And a third concludes: “Securities finance and collateral management are two sides of the same coin that need to be looked at together.”
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