TCS Capital Markets Forum | Mark Higgins Keeping on page
It is no good having all the systems in place if the data is not there, according to Mark Higgins, Managing Director and EMEA Head of Business Development for Global Collateral Management at BNY Mellon.
There has been a lot of discussion around segregation, optimisation and transformation. However, one of the most important things to focus on is the aggregation of the data. The reality is that you can’t offer any of these services without spending money and time to work out the best way to collect and collate information. That holds true for large investment banks or big or medium- sized asset managers because the collateral is becoming potentially scarce, and certainly more expensive whether it’s cash or securities. The optimisation of the instrument is basically which tube does it get sent down, and that ties in with the concept of ‘enterprise-wide collateral management.’ It is not new and has been around as long as I have been in the collateral management business, which is a good 15 years, but it is really coming to the market now. The other area to consider is the transformation issue. Against the background of a potential narrowing or collateral shortfall, the big question is ‘Do I have the right collateral or the wrong collateral?’ There will be winners and losers. For example,
if you are sitting long on government securities, or let’s say gilts and bunds, you are willing to take some risk and do that trade against equity. You are in a winning position if you have the credit appetite but there are many organisations that just do not have the right collateral. It will be very interesting to see where the transformation market is going. The traditional cycle would involve an investment bank or a clearing broker providing the service. However, many on the buyside are looking for alternative sources. One of the most interesting pieces of information I recently
Best Execution | Spring 2013
“It will be very interesting to see where the transformation market is going – many on the buyside are looking for alternative sources.”
heard was that corporates and pension funds were coming together as direct counterparties to one another on the basis that one has a lot of cash and the other has securities. Potentially they can swap and go into the repo market. From an operational technology perspective, it is clearly about platforms, automation and ensuring that you can understand where your collateral is. It is also having the ability to view that as near to real time as possible so you can make decisions, and within a very short timeframe allocate that collateral to fulfil your obligations. So T+1 or T+2, the settlement cycle that existed in collateral, is clearly going out the window incredibly fast. T0, the real time movement of collateral, is really the way of the future. ■
75
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100