Collateral Management

Since the financial crisis in 2008 capital market trading has been carried out to an ever greater extent on a collateralized basis.

In 2016, the regulator will set milestones for clearing obligations for interest rate and credit derivatives as well as collateral requirements for all non-centrally cleared OTC derivatives.

A bank that is active in the capital markets has usually implemented several collateral processes, including:

  • Exchange-traded derivatives
  • Central Counterparty cleared (CCP) OTC derivatives
  • Non-Cleared OTC derivatives
  • Bilateral or triparty repos / pooling
  • Collateral for central bank operations

The bundling of collateral processes within one operational entity is increasingly important because reporting demands holistic attention, for example for:

  • Control of liquidity ratios (LCR / NSFR)
  • Control of the loading of assets (Asset Encumbrance)
  • Control of the use of equity and debt resources (cost of equity, leverage ratio)
  • Optimization of returns generated by supply and use of cash and securities as collateral


Firstwaters has extensive experience in the management of collateral processes in the derivatives and securities business and we offer a range of services to our customers which include:

  • Design and implementation of holistic collateral management solutions in the derivatives and securities sector
  • Coverage of the entire process chain, including legal documentation and regulatory reporting
  • Low-level functional specification, test monitoring and implementation of the IT architecture
  • Management of the entire project
  • Analysis and implementation of legal requirements for clearing and collateralization of OTC derivatives (EMIR, RTS / ITS )