HSBC tackles new swap clearing rules
17 May 2016 London
Image: Shutterstock
HSBC has launched a new over-the-counter (OTC) clearing collateral service to support clients in meeting the requirements of the G20 swap clearing reforms.
Reforms coming in to effect through regulations such as the European Market Infrastructure Regulation (EMIR) require buy-side firms to better manage and mobilise collateral.
EMIR mandates clearing of OTC derivatives through a central counterparty, and similar initiatives are underway in Asia.
The new capability from HSBC will provide an independent and automated collateral management service including calculation and verification of margins and interest, and automated margin payments.
Collateral movements will be processed on a straight-through basis using standard SWIFT links with custodians.
The HSBC client portal can also provide underlying trade and collateral position information, as well as reporting services.
Craig Cowe, head of collateral management product and securities services at HSBC, commented: 鈥淚ncoming regulations to centrally clear OTC derivatives mean that it鈥檚 crucial for investment managers to know where their assets are and what they can be used for.鈥�
鈥淲e鈥檝e put in place collateral processing hubs in Europe and Asia and have invested significantly in our capability to ensure our clients can keep pace with global regulatory change.鈥�
John Van Verre, HSBC global head of custody and treasury, added: 鈥淚n the past, collateral management has been viewed by many institutional investors as a back office activity.鈥�
鈥淭hese new regulatory requirements mean that the process is becoming more firmly integrated with the front office, which requires much more proactive management of positions than historically was the case.鈥�
Reforms coming in to effect through regulations such as the European Market Infrastructure Regulation (EMIR) require buy-side firms to better manage and mobilise collateral.
EMIR mandates clearing of OTC derivatives through a central counterparty, and similar initiatives are underway in Asia.
The new capability from HSBC will provide an independent and automated collateral management service including calculation and verification of margins and interest, and automated margin payments.
Collateral movements will be processed on a straight-through basis using standard SWIFT links with custodians.
The HSBC client portal can also provide underlying trade and collateral position information, as well as reporting services.
Craig Cowe, head of collateral management product and securities services at HSBC, commented: 鈥淚ncoming regulations to centrally clear OTC derivatives mean that it鈥檚 crucial for investment managers to know where their assets are and what they can be used for.鈥�
鈥淲e鈥檝e put in place collateral processing hubs in Europe and Asia and have invested significantly in our capability to ensure our clients can keep pace with global regulatory change.鈥�
John Van Verre, HSBC global head of custody and treasury, added: 鈥淚n the past, collateral management has been viewed by many institutional investors as a back office activity.鈥�
鈥淭hese new regulatory requirements mean that the process is becoming more firmly integrated with the front office, which requires much more proactive management of positions than historically was the case.鈥�
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