Northern Trust expands collateral management capabilities
17 December 2019 Chicago
Image: Shutterstock
Northern Trust is expanding its collateral services for over-the-counter (OTC) derivatives trading to help clients meet regulatory margin obligations.
To develop the service, the bank partnered with risk and collateral management service provider AcadiaSoft to provide an outsourced solution for calculating clients鈥� initial margin obligations, issuing margin demands to clients鈥� brokers and determining if-and-when margin is to be transferred.
The new Margin Segregation Service promises to streamline complex processes for meeting the Uncleared Margin Rules, among other regulations, such as undertaking industry-standard electronic settlement messaging and providing advanced collateral reporting.
The service is also targeted at easing obligations under the European Market Infrastructure Regulation (EMIR) and the US Dodd-Frank Act, the bank says.
According to Northern Trust, clients can take advantage of the service to pledge assets from their trading account and place them into segregated accounts for each broker, thereby retaining their investments with a single asset servicing provider for optimal efficiency, consolidated record-keeping and oversight.
With this service, the bank says, clients will have the ability to seamlessly optimise collateral selection, using algorithmic technology to identify their best assets available to meet regulatory eligibility requirements.
Clients 鈥渃an also minimise the value of their assets locked up as collateral by using our optimisation solution,鈥� says Judson Baker, derivatives product manager at Northern Trust.
To develop the service, the bank partnered with risk and collateral management service provider AcadiaSoft to provide an outsourced solution for calculating clients鈥� initial margin obligations, issuing margin demands to clients鈥� brokers and determining if-and-when margin is to be transferred.
The new Margin Segregation Service promises to streamline complex processes for meeting the Uncleared Margin Rules, among other regulations, such as undertaking industry-standard electronic settlement messaging and providing advanced collateral reporting.
The service is also targeted at easing obligations under the European Market Infrastructure Regulation (EMIR) and the US Dodd-Frank Act, the bank says.
According to Northern Trust, clients can take advantage of the service to pledge assets from their trading account and place them into segregated accounts for each broker, thereby retaining their investments with a single asset servicing provider for optimal efficiency, consolidated record-keeping and oversight.
With this service, the bank says, clients will have the ability to seamlessly optimise collateral selection, using algorithmic technology to identify their best assets available to meet regulatory eligibility requirements.
Clients 鈥渃an also minimise the value of their assets locked up as collateral by using our optimisation solution,鈥� says Judson Baker, derivatives product manager at Northern Trust.
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