Transforming businesses: Preparing for the future
30 September 2024
Sam Edwards, managing director, head of collateral services EMEA and APAC at State Street, discusses the firm’s work to transform the world of buy side collateral management and bring tools and lessons to a broader market
Image: Sam Edwards
While State Street has been providing collateral management services for over 20 years, and currently offers a complete outsourced collateral management solution to clients, the introduction of our Collateral+ service has enabled a transformation in the way our clients manage their businesses. In addition, our clients are benefiting from our expanded and triparty offering.
Whether a current custody, State Street Alpha or direct client with Collateral+, our next generation platform integrates with internal and external platforms and trading systems. We leverage our extensive relationships globally to coordinate settlement of collateral through the full range of custodians and integrate our platform in real time with our client Investment Book of Record (IBORs).
Our service is agnostic to the underlying product that requires collateralisation (eg securities lending, futures, cleared, OTC derivatives, repos and longevity swaps). With the evolving challenges and opportunities our clients face post the completion of the role out of the Uncleared Margin Rules (UMR), we have adapted our services to span end-to-end through the collateral lifecycle, bringing pre and post-trade optimisation and enhanced liquidity and financing product access.
State Street’s expanded triparty solutions replace the legacy approach to bilateral, physical settlement of collateral, bringing technology driven optimisation engines and book movement transfer. Resource heavy, operationally risk intensive, volume sensitive processes that have raised significant market and regulatory interest in the past 12 months are removed, with triparty providing the platform for modern outsourced collateral management in a digitally prepared solution.
State Street triparty services tailored to the needs of buy side clients have facilitated settlement and inventory deployment optimisation for hedge funds, undertakings for collective investment in transferable securities (UCITS) funds and pension and insurance mandates, allowing them to access efficiencies that have historically been the preserve of the broker-dealer community.
In combination with our triparty, analytics and optimisation capabilities, Collateral+ is designed to optimise the cost of collateral, enable greater trading capabilities and integrate from front-to-back with a full suite of securities financing solutions. However, our modular approach enables us to provide the services our clients need at the time appropriate for them whether it be initial margin calculation and segregation, collateral administration, securities lending or financing. Our triparty platform is designed to fully collateralised and optimise across all traditional exposures, as well as new and innovative products such as Peer-to-Peer repo.
Collateral+ is a full service platform that combines sophisticated systems into a seamless client offering. Collateral+ technology is underpinned by a modern microservices architecture coupled with big data enhancing the performance, security and agility of the platform. It leverages private cloud for scalability and provides a multi-service, multi-tenant environment secured through robust data entitlements.
This technology is built with client focus and is integrated to their front, middle and back office systems, and provides access to dashboard reporting via the Collateral+ portal. This helps to ensure that our clients have up-to-date data in near real-time for better decision making and reducing financing and capital costs.
Our platform includes accelerators for faster client onboarding and digital representation of economic terms and conditions of governing collateral agreements. Technologies like Hadoop, Spark, Kafka, Scala, React, etc, enable the execution of complex use cases for clients. Clients also benefit through a wide array of network connectivity including AcadiaSoft, Pirum and TriOptima. Collateral+ enables straight-through processing (STP) via SWIFT or through application programme interface (API) connectives. Collateral+ integration with Acadia’s Initial Margin Exposure Manager (IMEM) and Margin Manager (MM) service helps our clients simplify the compliance requirements for UMR.
For the provision of analytics and optimisation, we partner with Cassini Systems to include the latest technology and integration for the Collateral+ service. This partnership with Cassini allows the integration of collateral and funding into the front office decision strategy before trades are placed thereby, enabling optimisation of margin and carry cost impact. This provides the best trade route by identifying all possible ways to execute and clear the trade, and highlights the lowest cost.
Collateral+ offers margin optimisation, utilising pre-trade what-if analysis and a post-trade utility with tools including novation and compression, to lower margin and funding requirements. We offer holistic data architecture and models designed to integrate across multi-product trading obligations. Our optimisation tools cover one or many products, counterparties, margin types and opportunities throughout the day. The analytics tools facilitate decision making and can be combined with third-party or triparty execution plans.
“We are excited to partner with State Street on further enhancing the Collateral+ offering with optimisation capabilities and analytics that can bring its clients substantial cost savings and a true understanding of front-to-back costs across the entire lifecycle of a trade,” said Liam Huxley, CEO of Cassini Systems. “The ability to apply these analytics to the Initial Margin requirements of UMR is a powerful way to identify optimal counterparties and manage thresholds strategically with each and every trading decision.”
Collateral+ is an integrated platform founded on modular components that empower clients to tailor their collateral management services, manage their day-to-day exposure risks and compliance obligations, of particular focus and criticality in times of market stress.
Our platform offers a solution for UMR compliance and optimisation, and helps to increase overall operational efficiency with real-time, aggregated data transparency and added STP to meet collateral demands. Collateral+ provides efficient pre and post-trade, and collateral analytics enabling clients to reduce margin and funding costs, therefore minimising any associated portfolio drag. Moreover, our dedicated, global team is well-placed to support our global client base on a follow the sun model.
We are proud to help transform the world of buy side collateral management and to bring those tools and lessons to a broader market, as sell side pre-trade and exposure management practices benefit from the enhanced processes and solutions. Creating Collateral+ with an ethos of ongoing development on the latest architecture, is enabling us to prepare for the future and we are excited to further develop our digital and distributed ledger technologies (DLTs) as we continue our disruptive thought leadership journey into 2024.
Whether a current custody, State Street Alpha or direct client with Collateral+, our next generation platform integrates with internal and external platforms and trading systems. We leverage our extensive relationships globally to coordinate settlement of collateral through the full range of custodians and integrate our platform in real time with our client Investment Book of Record (IBORs).
Our service is agnostic to the underlying product that requires collateralisation (eg securities lending, futures, cleared, OTC derivatives, repos and longevity swaps). With the evolving challenges and opportunities our clients face post the completion of the role out of the Uncleared Margin Rules (UMR), we have adapted our services to span end-to-end through the collateral lifecycle, bringing pre and post-trade optimisation and enhanced liquidity and financing product access.
State Street’s expanded triparty solutions replace the legacy approach to bilateral, physical settlement of collateral, bringing technology driven optimisation engines and book movement transfer. Resource heavy, operationally risk intensive, volume sensitive processes that have raised significant market and regulatory interest in the past 12 months are removed, with triparty providing the platform for modern outsourced collateral management in a digitally prepared solution.
State Street triparty services tailored to the needs of buy side clients have facilitated settlement and inventory deployment optimisation for hedge funds, undertakings for collective investment in transferable securities (UCITS) funds and pension and insurance mandates, allowing them to access efficiencies that have historically been the preserve of the broker-dealer community.
In combination with our triparty, analytics and optimisation capabilities, Collateral+ is designed to optimise the cost of collateral, enable greater trading capabilities and integrate from front-to-back with a full suite of securities financing solutions. However, our modular approach enables us to provide the services our clients need at the time appropriate for them whether it be initial margin calculation and segregation, collateral administration, securities lending or financing. Our triparty platform is designed to fully collateralised and optimise across all traditional exposures, as well as new and innovative products such as Peer-to-Peer repo.
Collateral+ is a full service platform that combines sophisticated systems into a seamless client offering. Collateral+ technology is underpinned by a modern microservices architecture coupled with big data enhancing the performance, security and agility of the platform. It leverages private cloud for scalability and provides a multi-service, multi-tenant environment secured through robust data entitlements.
This technology is built with client focus and is integrated to their front, middle and back office systems, and provides access to dashboard reporting via the Collateral+ portal. This helps to ensure that our clients have up-to-date data in near real-time for better decision making and reducing financing and capital costs.
Our platform includes accelerators for faster client onboarding and digital representation of economic terms and conditions of governing collateral agreements. Technologies like Hadoop, Spark, Kafka, Scala, React, etc, enable the execution of complex use cases for clients. Clients also benefit through a wide array of network connectivity including AcadiaSoft, Pirum and TriOptima. Collateral+ enables straight-through processing (STP) via SWIFT or through application programme interface (API) connectives. Collateral+ integration with Acadia’s Initial Margin Exposure Manager (IMEM) and Margin Manager (MM) service helps our clients simplify the compliance requirements for UMR.
For the provision of analytics and optimisation, we partner with Cassini Systems to include the latest technology and integration for the Collateral+ service. This partnership with Cassini allows the integration of collateral and funding into the front office decision strategy before trades are placed thereby, enabling optimisation of margin and carry cost impact. This provides the best trade route by identifying all possible ways to execute and clear the trade, and highlights the lowest cost.
Collateral+ offers margin optimisation, utilising pre-trade what-if analysis and a post-trade utility with tools including novation and compression, to lower margin and funding requirements. We offer holistic data architecture and models designed to integrate across multi-product trading obligations. Our optimisation tools cover one or many products, counterparties, margin types and opportunities throughout the day. The analytics tools facilitate decision making and can be combined with third-party or triparty execution plans.
“We are excited to partner with State Street on further enhancing the Collateral+ offering with optimisation capabilities and analytics that can bring its clients substantial cost savings and a true understanding of front-to-back costs across the entire lifecycle of a trade,” said Liam Huxley, CEO of Cassini Systems. “The ability to apply these analytics to the Initial Margin requirements of UMR is a powerful way to identify optimal counterparties and manage thresholds strategically with each and every trading decision.”
Collateral+ is an integrated platform founded on modular components that empower clients to tailor their collateral management services, manage their day-to-day exposure risks and compliance obligations, of particular focus and criticality in times of market stress.
Our platform offers a solution for UMR compliance and optimisation, and helps to increase overall operational efficiency with real-time, aggregated data transparency and added STP to meet collateral demands. Collateral+ provides efficient pre and post-trade, and collateral analytics enabling clients to reduce margin and funding costs, therefore minimising any associated portfolio drag. Moreover, our dedicated, global team is well-placed to support our global client base on a follow the sun model.
We are proud to help transform the world of buy side collateral management and to bring those tools and lessons to a broader market, as sell side pre-trade and exposure management practices benefit from the enhanced processes and solutions. Creating Collateral+ with an ethos of ongoing development on the latest architecture, is enabling us to prepare for the future and we are excited to further develop our digital and distributed ledger technologies (DLTs) as we continue our disruptive thought leadership journey into 2024.
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