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Northern Trust improves collateral mgt

17 March 2014


The custodian aims to help clients with new regulations impacting collateral and liquidity availability

Northern Trust has enhanced its collateral management and liquidity solutions in order to help clients with the implementation of new regulations.

There is increased demand for managing and optimising collateral mainly being driven by the US Dodd-Frank Act and European Market Infrastructure Regulation (Emir).

There are concerns that such rules could restrict the amount of collateral and liquidity available in the market.

"The intersection of these regulations will impact institutional investors in a number of ways, particularly increasing the need for liquidity and, over the longer, term creating a collateral squeeze," said Fiona Horsewill, head of product and strategy for Emea at Northern Trust.

Northern Trust said its improved solution will enable clients to hold their assets in a transparent account structure, even when being used for collateral for clearing derivative positions.

Clients will be able to view their full asset inventory and track the location of assets held in custody with and outside of Northern Trust, and access eligible collateral for initial margin requirements.

The solution will also allow the review and evaluation of counterparty exposure as well as monitoring potential future liquidity needs.

"By expanding our liquidity access solutions, we can help support our clients' short-term liquidity needs so that they are not required to liquidate assets unnecessarily in order to meet the variation margin demands," said Horsewill.

"We will continue to work closely with our clients and the wider market to create solutions that will ensure access to eligible collateral through a variety of sources to meet regulatory driven collateral requirements."


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