What is Enterprise Collateral Management

The parallel adoption of the Basel III enhanced capital adequacy framework and the various strands of regulation implementing the G20's OTC derivatives reforms presents a massive challenge to financial market participants that must be addressed if anything close to current levels of activity and returns are to be maintained. As well as the effort required to achieve compliance with explicit requirements, the evolving regulatory environment seems set to put intense pressure on the narrow universe of assets that will be required by banks and other financial institutions to meet minimum liquidity requirements and collateral obligations. Enterprise Collateral Management is an evolving concept that seeks to address these challenges.

In this paper co-authored with SunGard, we examine the drivers for and approach to holistic, firm-wide collateral management. The paper explores the levels of re-engineering of existing organisational design, business processes and systems infrastructure required to achieve this, and also considers the risk management and funding benefits that can be achieved from the active and prudent management of collateral and how this provides a compelling business case for investment.

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