BNP Paribas Securities Services is set to expand its collateral management range of services in Asia Pacific (APAC) to assist firms in the region manage initial margin requirements arising from non-cleared over-the-counter derivatives positions.
The initial margin rules, which aim to mitigate counterparty risk, have been increasingly coming into force since 2016.
Phase 5 and 6 for institutions with non-cleared derivatives positions respectively above €50 billion and €8 billion will come into force in 2021 and 2022.
BNP Paribas Securities Services’ initial margin solution, live since 2017, enables financial institutions to outsource the implementation of initial margin models and processes.
The models and processes include risk factors and initial margin calculations, exposure management, exchange of initial margin calls and a triparty collateral management solution with segregated custody arrangements.
According to David Beatrix, head of product, collateral access, at BNP Paribas Securities Services, asset owners can have a “challenging time” when implementing initial margin requirements.
This is due to the size of their derivative positions and that they tend to operate under one single consolidated entity, he explains.
Beatrix says: “Asset owners also tend to delegate their investment process across multiple managers, which can result in fragmented initial margin calculations leading to higher collateral requirements. Our services take the complexity out of the process, enabling asset owners to centralise their calculations and adopt a streamlined and efficient approach to initial margins implementation.”
Philippe Tassin, head of asset owners and managers at BNP Paribas Securities Services, adds: “For our asset owner clients, calculating their collateral needs, and optimising often scarce collateral resources, have become vital to the success of their investment and risk management practices.”
“Our solutions help them manage the huge amount of data and complex calculations associated with over the counter derivatives regulations.”
Elsewhere at BNP Paribas Securities Services, a new mandate has been gained from Clearstream as local sub-custodian in Australia and New Zealand.
