01 September 2017
Reporter: Jenna Lomax

Front-to-back operational shift is needed, says SimCorp’s Baker

A fundamental front-to-back operational shift is needed to best fulfil investment objectives in an increasingly challenging market, according to Mark Baker, product manager at SimCorp.

Variation margin exchange for non-centrally cleared OTC derivatives, which came into effect earlier this year, is putting increasing pressure on the collateral management function, although it’s not just a back-office issue.

Baker said: “Though collateral management has traditionally been a back-office function, operating on a periodic basis, the new regulation will see it flooding into the front office’s daily workflow.”

Baker pointed to an ongoing survey to suggest one of the primary ‘pain points’ in collateral management, identified by buy-side firms, is increasing volumes.

Baker suggested these increasing volumes are “likely to surge, as pledged and received collateral will no longer be periodically exchanged in arrears and at high thresholds”.

“Instead, asset managers will need to mark their books to market daily, and at much lower thresholds.”

He added: “To add to these new and intensified volumes, trades with counterparties prior to and after 1 March 2017, could have not one but two margin calls, legacy and regulatory.”

Subscribe to the next issue of Asset Servicing Times, published on 6 September, to read Mark Baker’s article in full.

More news
The latest news from Asset Servicing Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
SLI goes live on Calastone’s settlement service
23 November 2017 | London | Reporter: Jenna Lomax
Standard Life was added to the solution following its £11 billion merger with Aberdeen Asset Management, which was completed in March this year
BNP Paribas hires new Hong Kong head
23 November 2017 | Hong Kong | Reporter: Jenna Lomax
Kasparian will be responsible for developing relationships with new and existing clients, as well as delivering best-in-class operations and services
Monyx selects RBC I&TS to manage SICAV umbrella
23 November 2017 | Luxembourg | Reporter: Jenna Lomax
RBC I&TS will provide custody, fund administration, transfer agency, securities lending and foreign exchange services to Monyx
Societe Generale boosts ESG reporting
22 November 2017 | Paris | Reporter: Jenna Lomax
The new solution allows institutional investors and asset managers to rate their investments against ESG indicators
Tobam launches bitcoin mutual fund
22 November 2017 | Paris | Reporter: Jenna Lomax
The fund will allow investors access to cryptocurrency to benefit from Tobam’s research and IT systems to track the value of investing in bitcoin
Strate adopts Nasdaq blockchain solution for voting
22 November 2017 | Stockholm | Reporter: Becky Butcher
Nasdaq is set to provide its blockchain electronic voting solution to South African Central Securities Depository (CSD) Strate
UniCredit launches instant payment solution
22 November 2017 | Milan | Reporter: Becky Butcher
UniCredit has launched its cross-border instant payments solution in Italy and Germany
More news