Research highlights need for efficiency
27 June 2014 New York
Image: Shutterstock
While regulations continue to drive firms鈥� investments in new technology and infrastructure, a number of other trends are influencing firms鈥� desire to increase efficiency, according to a new whitepaper from Sapient Global Markets.
These trends include shortfalls, cross asset netting, collateral optimisation and transformation.
Thomas Schiebe, senior associate at Sapient Global Markets, commented: 鈥淢arket participants have patched together fragmented systems, manual processes and siloed approaches to ensure compliance with various regulatory requirements.鈥�
鈥淯nfortunately, such disjointed efforts have made managing and processing collateral inefficient and costly, which impacts profitability.鈥�
As the costs of central clearing, collateral reporting and margining continue to rise, the whitepaper states that firms will need to bring efficiency to several areas of their collateral management process in order to remain competitive and protect revenues.
The paper also identifies and discusses six key areas for improvement, namely: inventory management, risk management, data management, reporting and analysis, dispute management and communication standards.
鈥淔rom the current environment of batch processes and reactive collateral management decisions, firms are now looking holistically at collateral management projects,鈥� Schiebe added.
鈥淭hey realise that automation is needed to manage higher collateral volumes, increased margin calls and interaction with more counterparties. As collateral management continues to evolve, driven by regulatory reform, firms are taking positive steps to remain competitive and protect revenues.鈥�
These trends include shortfalls, cross asset netting, collateral optimisation and transformation.
Thomas Schiebe, senior associate at Sapient Global Markets, commented: 鈥淢arket participants have patched together fragmented systems, manual processes and siloed approaches to ensure compliance with various regulatory requirements.鈥�
鈥淯nfortunately, such disjointed efforts have made managing and processing collateral inefficient and costly, which impacts profitability.鈥�
As the costs of central clearing, collateral reporting and margining continue to rise, the whitepaper states that firms will need to bring efficiency to several areas of their collateral management process in order to remain competitive and protect revenues.
The paper also identifies and discusses six key areas for improvement, namely: inventory management, risk management, data management, reporting and analysis, dispute management and communication standards.
鈥淔rom the current environment of batch processes and reactive collateral management decisions, firms are now looking holistically at collateral management projects,鈥� Schiebe added.
鈥淭hey realise that automation is needed to manage higher collateral volumes, increased margin calls and interaction with more counterparties. As collateral management continues to evolve, driven by regulatory reform, firms are taking positive steps to remain competitive and protect revenues.鈥�
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