Since the banking crisis, collateral optimisation has been a major focus for buy and sellside firms as they endeavour to manage capital and liquidity - driven by Basel III, Dodd Frank and EMIR regulations, plus a changing appetite to correctly account for market, credit and liquidity risk in pricing the derivative transaction.
Liquidity will become more expensive. According to estimates, the additional required collateral will range from 2 to 11 trillion US dollars in times of stress or uncertainty.
Demands to support liquidity ratios, as below, will influence the cost of liquidity and liquid assets over time:
- Liquidity coverage ratio (LCR) by retaining high-quality liquid assets (HQLA)
- Gross initial margining against bilateral OTC transactions
- Mitigation against intraday liquidity risks and increased activity through listed derivatives and CCPs
The GFT Collateral Optimiser can make dramatic improvements in the calculation and management of your collateral. It is designed to enable banks to accelerate the implementation and renovation of their internal collateral management process.