Tokenisation reshaping approaches to collateral optimisation
09 November 2021
Tokenisation is going to shift collateral management from being reactive, as it typically is today, to being a lot more proactive, says a panel at the 网爆吃瓜 Finance Technology Symposium. Carmella Haswell reports
Image: stock.adobe.com/wutzkoh
Tokenisation is going to shift collateral management from being reactive, as it typically is today, to being a lot more proactive, says panellist Gabi Mantle at the 网爆吃瓜 Finance Technology Symposium, hosted by SFT.
In a panel moderated by Jonathan Adams, managing principal of securities finance and collateral management at Delta Capita, the subject of collateral management and optimisation was discussed. Several industry experts touched on the involvement and impact of the Central 网爆吃瓜 Depositories Regulation (CSDR) in the collateral space.
Panellists included Ted Allen, director of business development, securities finance and collateral at FIS Global; Wassel Dammak, head of collateral solutions strategy at Vermeg; Gabi Mantle, post-trade product specialist at EquiLend; Alan Sheehan, product management director at Adenza; and Martin Walker, head of product management, SFCM at Broadridge.
EquiLend鈥檚 Mantle notes: 鈥淐SDR is going to help get to a more proactive stance by forcing improved visibility across future settlement ladders. In order to ensure minimal impact of CSDR fines, firms need to understand what their settlement management looks like. It鈥檚 going to facilitate a much more accurate view of inventory in terms of your projected and settled inventory.鈥�
The panellist continues to say that CSDR will help to bring improved settlement rates, facilitating more accurate views of that inventory. In order for this to work, the industry needs more standardisation. However, it was noted that there is not yet a consensus on what that standardisation looks like.
Pushing the agenda forward, Delta Capita鈥檚 Adams says: 鈥淯MR has been a big driver for collateral transformation, one of the reasons we want to talk about tokenisation is that the demand for collateral for initial margin would be met better if it was easier to do collateral transformation.鈥�
In support of this statement, Mantle recognises UMR as one of the drivers within the collateral space in recent times.
She explains: 鈥淭here is certainly much more demand as a result of UMR, more collateral need means increased collateral transformations, increased trading activity adds pressure to both trading desks and also operational teams. We do need as an industry to be able to mobilise and facilitate that increase in collateral movements and the demand is only expected to increase over the next six, 12, 18 months.鈥�
A point of concern, that was highlighted by the panel, circled around the impact buy-side firms now face from UMR Phase 5 and 6. Despite these firms needing to transform collateral, they do not necessarily have the tools to do this.
However, a range of automated platforms and solutions are available to firms to facilitate this.
During the panel鈥檚 final thoughts on the discussion of collateral management, Broadridge鈥檚 Walker says: 鈥淥ne of the key things that has come out, particularly when we look at securities lending, is how many of these trends are driving a convergence of trading and collateral management.鈥�
The adoption of standardisation and automation is imperative in order to support these changing demands, says Mantle.
And FIS Global鈥檚 Allen concludes: 鈥溚怨� finance and collateral management are two sides of the same coin that need to be looked at together.鈥�
In a panel moderated by Jonathan Adams, managing principal of securities finance and collateral management at Delta Capita, the subject of collateral management and optimisation was discussed. Several industry experts touched on the involvement and impact of the Central 网爆吃瓜 Depositories Regulation (CSDR) in the collateral space.
Panellists included Ted Allen, director of business development, securities finance and collateral at FIS Global; Wassel Dammak, head of collateral solutions strategy at Vermeg; Gabi Mantle, post-trade product specialist at EquiLend; Alan Sheehan, product management director at Adenza; and Martin Walker, head of product management, SFCM at Broadridge.
EquiLend鈥檚 Mantle notes: 鈥淐SDR is going to help get to a more proactive stance by forcing improved visibility across future settlement ladders. In order to ensure minimal impact of CSDR fines, firms need to understand what their settlement management looks like. It鈥檚 going to facilitate a much more accurate view of inventory in terms of your projected and settled inventory.鈥�
The panellist continues to say that CSDR will help to bring improved settlement rates, facilitating more accurate views of that inventory. In order for this to work, the industry needs more standardisation. However, it was noted that there is not yet a consensus on what that standardisation looks like.
Pushing the agenda forward, Delta Capita鈥檚 Adams says: 鈥淯MR has been a big driver for collateral transformation, one of the reasons we want to talk about tokenisation is that the demand for collateral for initial margin would be met better if it was easier to do collateral transformation.鈥�
In support of this statement, Mantle recognises UMR as one of the drivers within the collateral space in recent times.
She explains: 鈥淭here is certainly much more demand as a result of UMR, more collateral need means increased collateral transformations, increased trading activity adds pressure to both trading desks and also operational teams. We do need as an industry to be able to mobilise and facilitate that increase in collateral movements and the demand is only expected to increase over the next six, 12, 18 months.鈥�
A point of concern, that was highlighted by the panel, circled around the impact buy-side firms now face from UMR Phase 5 and 6. Despite these firms needing to transform collateral, they do not necessarily have the tools to do this.
However, a range of automated platforms and solutions are available to firms to facilitate this.
During the panel鈥檚 final thoughts on the discussion of collateral management, Broadridge鈥檚 Walker says: 鈥淥ne of the key things that has come out, particularly when we look at securities lending, is how many of these trends are driving a convergence of trading and collateral management.鈥�
The adoption of standardisation and automation is imperative in order to support these changing demands, says Mantle.
And FIS Global鈥檚 Allen concludes: 鈥溚怨� finance and collateral management are two sides of the same coin that need to be looked at together.鈥�
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