Marije Verhelst, Head of Product Strategy and Development - Collateral Management and Securities Lending, Euroclear, and Todd Hodgin, Global Head of Product at Transcend, discuss why collateral optimisation is no longer a luxury, but a necessity.
Joining forces on collateral optimisation
Collateral optimisation has long been a hot topic within the industry and has become a necessity for firms to navigate the complexity of modern financial markets and regulation. Regulatory changes have dramatically increased the demand for collateral, impacting liquidity and funding costs and creating the need for far greater operational efficiency. Optimising collateral allocation and usage reduces funding costs, improves asset allocation and mitigates risk. Euroclear and Transcend, two world leaders in their fields, have joined forces to provide an unbeatable solution for your growing collateral optimisation needs. (www.securitiesfinancetimes.com)
Marije Verhelst: "Historically, collateral optimisation has always had a main objective of minimising the overall cost of funding of a firm, while securing seamless access to vital liquidity. However, the implementation of mandatory regulatory requirements like Liquidity Coverage Ratio (LCR), Net Stable Funding Ratio (NSFR), Risk-Weighted Assets (RWA), etc. has had a significant impact on the way dealers are looking at optimisation, increasing its potential value but also making it more complex to achieve as success is dependent on more parameters and constraints than ever.
Ultimately, collateral optimisation has evolved into a strategic requirement for all firms, although the strategies and approaches vary widely. It is increasingly seen as a way for firms to gain advantages over their peers in the market. By optimising collateral, firms can enhance their competitiveness and position themselves more favourably in the industry."
Marije Verhelst - Head of Product Strategy and Development - Collateral Management and Securities Lending, Euroclear
Todd Hodgin: "The collateral optimisation landscape has grown significantly more complex over the last several years. Our clients are pursuing various strategic objectives across a range of needs - from regulatory compliance to better capital management, liquidity preservation, funding and operational efficiencies. They have also expressed difficulty in navigating the complexity of meeting these goals, which are created by integrating with a variety of market venues and aggregating activity across different technology stacks and data sources. Without a single ‘golden source’ institutions must integrate, reconcile and make sense of fragmented information spread across many internal systems and external venues. That's where Transcend steps in. Despite these challenges, the urgency around optimisation has never been greater. Clients are asking for real-time decision making, cost transparency and automated collateral mobility."
