Introduction to Collateral Management 

  • 9:00 am - 5:00 pm
  • Level: Basic
  • Group-Live
  • $995.00 US
  • Group discounts available


Michael J. Barrett    Read bio

COURSE objectives

Regulatory changes and changing market practices continue to increase the importance of efficient margin and collateral management across the financial markets spectrum, and impacts all market participants – banks and broker dealers, asset managers and asset owners, market infrastructure and regulators, intermediaries, and corporates.  Upon course completion, attendees will have a solid foundation in the principles of margin and collateral management across financial enterprises and markets. 

  • Hours:  9:00 am-5:00 pm (registration/breakfast starts at 8:30 am)
  • Advance preparation: None


1. What is Collateral?

  • Definition of Collateral
  • Types of Collateral
  • Purpose of Collateral
  • Other related terms (mark-to-market, threshold, initial margin, variation margin, eligible collateral, haircut, etc.)

2. Key Players in Collateral Management

  • Investor/hedge fund
  • Broker/dealer
  • Custodian
  • Depository
  • Agent bank
  • Central counterparty / clearinghouse

3. Collateral Call Process

  • How a collateral call arises
  • Daily call cycle (including portfolio mtm valuation, collateral valuation, margin call calculation and management, dispute management, reconciliation, collateral booking and settlement, custody administration (corporate actions on collateral), interest calculation and payment, reporting)

4. Types of Collateral Management/ Margin Calculation Models

  • Product-aligned margining
  • Cross-product margining (single net margin call)
  • Risk-based margining (strategy-based margining, analytically-based margin call)

5. Recent Trends in Collateral Usage and Management

  • Growing number of collateral agreements and volume of collateral
  • The universe of counterparties is expanding and credit terms are tightening
  • Greater emphasis on portfolio reconciliation
  • Decrease in rehypothecation
  • Frequency of margin calls is accelerating with daily/intra-day margin calls
  • Rethinking of risk exposure by buy side firms
  • Increased need for sophisticated collateral management e.g. cross-product margining
  • Increased role of central counterparties and clearinghouses

6. Operational Challenges in Collateral Management

  • Increasing complexity in collateral agreements, valuation and tracking
  • Lack of unified view for margin call management across products
  • Limited intra-day access to data for margin calculation, collateral tracking and reporting
  • Lack of automation around the collateral call process
  • Poor data quality, forecasting and risk measurement capabilities

7. Key Imperatives in Collateral Management

  • Accurate and timely information on exposure, real-time exposure updates
  • Consolidation of exposures across products for cross-product margining and collateral optimization
  • Intelligent, pro-active portfolio reconciliation capabilities
  • Supporting a wider range of collateral types (e.g. physical assets, commodities)
  • Real-time tracking and valuation of collateral
  • Stress testing and scenario analysis capabilities
  • STP of the collateral call process - e.g. ability to simultaneously send multiple collateral calls and settlement instructions
  • Static data management (collateral agreements, organization data)
  • Focus on client services - unified view of exposure and collateral information, real-time access to data, customizable reporting, interest accruals

8. Best Practices in Collateral Management Technology

  • Single, enterprise-wide collateral management platform to standardize processes and infrastructure across products and business lines
  • Integrate with risk & control systems to enable advanced risk analytics and allow for seamless changes to policies, limits, etc.
  • Support for XML/FpML and Web Services to interface and interact with various upstream and downstream applications
  • Rules-based margin calculation, consolidation/ netting & collateral valuation
  • Event-driven, configurable workflow functionality
  • STP with exception-based processing, flexible platform to handle multiple collateral types, changing regulations, re-calcs, overrides
  • Advanced data management for warehousing collateral agreement terms, accepting different internal/ external data feeds in multiple formats
  • Flexible reporting infrastructure

In-house instruction is available.  Contact us to inquire.

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