No respondents accepted gold. Asked for the percentage split of their tri-party activity by term, the aggregated response was: 38% overnight; 14% one week; 15% one month; 12% three months; 4% six months; 6% more than six months; and 11% open. Most respondents covered Western European markets (32%), followed by North America (22%), Asia Pacific, developed (16%), emerging Europe (10%), Asia Pacific, emerging (8%), Latin America (5%), Middle East (4%) and Africa (3%).
Respondents to the survey were asked to give reasons for adopting the triparty model. The most popular reason for adopting tri-party was highly ‘automated process’ – for which almost half, 46%, gave a top importance rating of 7. This was followed by: automatic substitution of ineligible collateral (44%); daily margining (40%); and more sophisticated eligibility filters (37%). Considered relatively important reasons were: book entry environment (31%); access to new counter parties (28%); accuracy of pricing (28%); and collateral re-use (23%).
Considered less important reasons were: better reporting (20%); supports more diverse collateral types (17%); and new markets (12%). Respondents were also asked which areas of tri-party needed improvement.
Among areas cited were: work with local regulators and exchanges to get more emerging markets on board such as Korea and Taiwan; netting of tri-party transactions at a client level and substitution capabilities; valuation of structured finance securities such as ABS and CLOs; late return of funds impacting management of cash; STP instructions; fails handling; static data; supported eligibility criteria, as no agents can apply haircuts based on duration for fixed income instruments, only maturity; better reporting and quicker implementation of collateral schedules; more transparency around real time reporting; link between different triparty agents for collateral exchange; and ability to manage/change eligibility criteria more dynamically/quicker and with greater granularity.
Commercial/private banks, broker/dealers, hedge funds, custodians, money market funds, pension funds, insurance companies, corporates, central banks and mutual funds were asked to rate their tri-party providers across a number of service categories, on a scale from 1 (very poor) to 7 (excellent).
Service category tables
For each provider, all respondent scores in each service category were averaged to give a single score per service category. Additional service category tables were added this year: ability to create bespoke schedules; ability to manage equities as collateral; and implementation of collateral sets schedule. All tables are presented in the magazine:
Ability to create bespoke schedules
Ability to manage equities as collateral
Access to counterparties
Accuracy of margin calls
Breadth of market coverage
Breadth of supported eligibility criteria
Handling of fails
Implementation of collateral sets/schedules
Level of STP offered
Quality of client service
Quality of reporting/client interface
Quality of static data
Timeliness of margin calls
Timeliness of settlement
Tri-party providers required a minimum of 10 responses to qualify in the overall table and qualify in a minimum of two regions. Each respondent’s scores were averaged to give a final respondent score.
Each of the regions required a minimum of five responses. The respondent’s location was used when calculating the regional tables: EMEA, Americas and Asia Pacific.