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Asia collateral management demand grows

20 February 2014

Regulation is driving demand for collateral management in Europe and the US. But Asia will not escape the extraterritorial fallout, finds Paul Golden, and similar local regulation may soon appear

Read more: collateral management OTC derivatives tri-party

Even though counterparty trust remains high and regulators have been slow to impose local rules, Asian market participants are increasingly recognising the value of collateral management.

The process of implementation of G20 regulatory reform on OTC derivatives and new capital rules is less progressed across Asia than the US or Europe and the unsecured financing that diminished in Europe and the US following the global financial crisis is still a widely employed market practice.

Yet interest in collateral management has been increasing across the region. Even by last April more than nine in ten delegates at Clearstream’s Global Securities Financing Conference Asia described identifying the right type of collateral as either a high or very high priority for their organisation.

Swen Werner, product head of collateral management Asia Pacific JPMorgan suggests local market participants increasingly see the value of collateralising their trades. "Demand is a function of the level...