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