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Clearstream collateral management findings
28 January 2014
Summit points to management shortcomings
Sourcing the most appropriate collateral to cover global exposures is increasingly a top priority for financial institutions, yet most still have “much work to undertake” to establish a clear approach to their collateral management needs.
These were the findings of an anonymous poll of banking professionals at Clearstream's 18th Global Securities Financing Summit held in Luxembourg from 22-23 February.
Some 95% of the delegates - who represented pan-regional institutions, infrastructures, investment banks, universal banks and central banks from across the globe - expressed the view that sourcing the most appropriate collateral to meet new industry practices has risen up their institution's agenda in the past 12 months.
At the same time, more than 61% agreed that their financial institution still had some way to go to establish a clear strategy, approach and measures to address future collateral management needs. According to the poll, only 13% had already reached readiness.
Additionally, in light of upcoming regulatory requirements worldwide for financing to be more collateralised, 85% strongly agreed that triparty repos would become increasingly attractive to corporates as a replacement to cash deposits.
Stefan Lepp, head of global securities financing and executive board member at Clearstream, said the poll results clearly demonstrated that overcoming the collateral challenge remained a global issue that required continued attention and support.
"The financial community knows that it needs to get smarter about its collateral management operations to help de-risk the markets and comply with regulatory requirements. Yet while we know that collateral is in theory available, much of it remains fragmented and difficult to unlock and mobilise, which comes at a high cost. At the same time, creating new systemic risk by pooling collateral in a single place must be avoided.”