Royal Bank of Canada (RBC) Investor & Treasury Services (I&TS) has launched a collateral management solution for over-the-counter (OTC) derivatives and repos in order to help asset managers comply with the Uncleared Margin Rules (UMR).
The Basel Committee on Banking Supervision (BCBS) and International Organisation of Securities Commissions (IOSCO) rules for non-cleared derivatives, commonly known as UMR, seek to establish international standards for non-centrally cleared derivatives.
Asset managers, pension funds and insurance companies are scheduled to come in-scope of the UMR based on their volume thresholds either with phase five on 1 September 2020 or 1 September 2021 for phase six.
The new RBC I&TS platform, which leverages technology provided by CloudMargin via IHS Markit, aims to offer the centralisation of standing settlement instructions and credit support annex contracts (CSAs).
Users will also gain the ability to make, receive and monitor margin calls with bilateral counterparts, and determine collateral eligibility.
Moreover, the platform will offer a service to validate incoming collateral calls from bilateral counterparts and enrichment and instructions of movements to third party custodians.
Finally, RBC says the solution will optimise inventory availability and waterfall selection of preferred assets to pledge.
Joanna Meager, head of digital client experience, product and marketing at RBC I&TS, said: “New rules around collateral have resulted in asset managers facing increased reporting requirements and significant operational demands.
“RBC I&TS’ new solution enables asset managers to remain competitive by improving their middle and back-office efficiencies.”
The service initially launched with BIMCOR in Canada, a wholly-owned subsidiary of Bell Canada. BIMCOR currently manages more than $25 billion in assets mainly on behalf of pension funds of Bell Canada and its various subsidiaries and affiliates.
“We were looking for an automated solution to collateralize our OTC derivative and repo transactions in order to meet our ISDA/CSA requirements as well as manage our counterparty risk,” explained Remy Orsoli, vice president, finance and operations at BIMCOR.
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