Collateral managers must regroup to tackle incoming regulation
10 November 2017 London
Image: Shutterstock
Centralisation of the collateral function should be the highest priority for collateral managers in 2018 in order to ward off demanding collateral rules, according to Ted Allen, director of business development at Apex Collateral.
Allen explained that, due to incoming regulation requirements, firms will likely have to “make the transition from tactical solutions … [for compliance] to a more strategic approach”.
In particular, the implications of the of the second Markets in Financial Instruments Directive (MiFID II), which is due to go live on 3 January next year, will be front and centre in managers’ minds going forward.
Allen also predicted that “coping with rising interest rates and increased collateral requirements will also be a key topic for the year ahead”.
Despite the fast approaching implementation date, Allen admitted that “there’s still a lot of questions around it [MiFID II]”, including how the latest requirements will blend with other incoming frameworks, such as over-the-counter margin rules for derivatives.
He said: “It will be interesting to see if there’ll will be another increase in volumes, caused by the inclusion of FX forwards under the OTC derivatives margining regime”.
Despite industry uncertainty, Allen clarified that Apex was prepared for the implementation of MiFID II and that the firm had “done a lot of work with clients to help them get compliant”.
Allen said: “[Apex has a] highly efficient collateral operations tool to provide full straight-through processing of the margin call process” and that “our clients experience significant efficiency gains from deploying Apex Collateral.”
Subscribe for free to the next issue of Securities Lending Times, published on 14 November, to read this article in full.
Allen explained that, due to incoming regulation requirements, firms will likely have to “make the transition from tactical solutions … [for compliance] to a more strategic approach”.
In particular, the implications of the of the second Markets in Financial Instruments Directive (MiFID II), which is due to go live on 3 January next year, will be front and centre in managers’ minds going forward.
Allen also predicted that “coping with rising interest rates and increased collateral requirements will also be a key topic for the year ahead”.
Despite the fast approaching implementation date, Allen admitted that “there’s still a lot of questions around it [MiFID II]”, including how the latest requirements will blend with other incoming frameworks, such as over-the-counter margin rules for derivatives.
He said: “It will be interesting to see if there’ll will be another increase in volumes, caused by the inclusion of FX forwards under the OTC derivatives margining regime”.
Despite industry uncertainty, Allen clarified that Apex was prepared for the implementation of MiFID II and that the firm had “done a lot of work with clients to help them get compliant”.
Allen said: “[Apex has a] highly efficient collateral operations tool to provide full straight-through processing of the margin call process” and that “our clients experience significant efficiency gains from deploying Apex Collateral.”
Subscribe for free to the next issue of Securities Lending Times, published on 14 November, to read this article in full.
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