Collateral Management - Securities Lending Times

Keeping up with collateralEditorialCommentSLTSECURITIESLENDINGTIMESEditor: Mark Dugdaleeditor@securitieslendingtimes.comTel: +44 (0)20 8289 2405Journalist: Georgina Laversgeorginalavers@securitieslendingtimes.comTel: +44 (0)20 3006 2888Editorial assistant: Jenna Jonesjennajones@securitieslendingtimes.comTel: +44 (0)20 8289 6871Marketing director: Steven Lafferftydesign@securitieslendingtimes.comTel: +44 (0)784 3811240Publisher: Justin Lawsonjustinlawson@securitieslendingtimes.comTel: +44 (0)20 8249 2615Commercial manager: Michael Bradymichaelbrady@assetservicingtimes.comTel: +44 (0)20 8289 5795Head of research: Chris Laffertyjustinlawson@securitieslendingtimes.comTel: +44 (0)20 8249 2615Office fax: +44 (0)20 8711 5985Published by Black Knight Media LtdProvident House6-20 Burrell RowBeckenhamBR3 1ATUKThe process of collateral management hasgone through somewhat of a change since thecollapse of Lehman Brothers and the onset ofthe financial crisis (that markets have yet to fullyrecover from). It is no longer deemed to be aprocess—today, collateral management is abusiness, and a booming one at that.Industry figures suggest that collateral in circulationrose 24 percent—from $2.9 trillion to $3.6trillion—over the course of 2011. Whether this increasein collateral use is market driven or regulatorydriven, with higher values comes greaterresponsibility. As one industry professional commentedrecently, the spotlight has always beenon collateral management, but it is probablyburning at its brightest at the moment due toheightened fears around counterparty defaults.Collateral managers who are faced with multipletrading desks and have a diverse collateral portfolioto oversee—not to mention counterpartiesto assess—are being forced to into the limelightmore than ever before. It is important that theytake a step back to look at how their businessesare collateralising trades, what they are collaterisingthem with and who they are dealing with.Only a fully informed collateral manager can beginto break down silo barriers and overcomerestrictive internal cultures, while anticipatingthe effects of pending regulatory change anddeciding whether to outsource some or all of acollateral management operation.The 2012 edition of the Securities LendingTimes Collateral Management Annual Reportsuggests that collateral management is aboutsecuring trades as efficiently as possible withoutcompromising on quality.According to the edition’s contributors, goodpools of collateral remain undiscovered, sophisticatedcollateral management operationsare deployable across businesses, and whileregulatory changes will put a lot of pressure onindustry technology, partners exist who can helpto ease the burden.The business of collateral management isevolving. Industry professionals need to be preparedto keep up with the times, or risk beingleft behind.Mark DugdaleEditorCompany reg: 0719464Copyright © 2012 Black Knight Media Ltd.All rights reserved.3www.securitieslendingtimes.com