Collateral Focus

2024 was marked by record client volumes. Key metrics include: record numbers of collateral agreements managed; increased margin call volumes; expanded use into new asset classes, particularly repo, cleared & ETD margin; and an increase in collateral settlement (both the custodian network and SWIFT instructions processed).

Key trend: Firms have extended their system use as they seek to increase their automation capabilities & levels of STP.

Is your collateral management strategy keeping pace?

A recent survey of collateral managers at the Fleming Collateral Management and Securities Lending Forum revealed some interesting trends.

• Automation & new technologies are key to operational efficiency
• 63% consider multi-asset class support critical
• Focus on reducing funding costs through optimisation
• Improved dispute workflow is essential
• 76% expect increases in collateral funding

ISDA SIMM Version 2.7: How will the SIMM recalibration affect initial margin requirements?

The annual recalibration of the ISDA Standard Initial Margin Model (SIMM) went live on 7 December 2024 and reflects the latest market data and industry backtesting of the methodology. We have analysed the impact of SIMM 2.7 on client portfolios and preliminary data shows up to 20-30% reductions in initial margin requirements, though the degree of benefit will vary based on portfolio composition. Read our key takeaways.

Note, from 2025 SIMM will be recalibrated twice annually.

➜ Read article

OSTTRA and FIS set to transform listed derivatives trade processing

With record volumes seen in ETD markets, firms are increasingly demanding greater insights into initial margin requirements and improved operational efficiency, We are excited to announce a strategic collaboration with FIS to bring new transparency to the exchange-traded derivatives (ETD) post-trade lifecycle.

Together, we aim to streamline operations, reduce risk, and enhance efficiency for market participants worldwide.

➜ Read press release

Focusing on Collateral: It’s Not Just About the Back Office

In the post-2008 landscape, the role of collateral managers has become increasingly critical in maintaining operational efficiency, ensuring regulatory compliance, and mitigating counterparty risk & 2025 is likely to be more challenging and technology-driven than ever before.

Collateral managers will need to ensure they are ready to support the growing focus of their colleagues in front office, risk, and technology, ensuring their firms can meet compliance requirements and optimise collateral positions, while supporting a wider focus on liquidity management and risk mitigation.

➜ Read article

If you’re not already using OSTTRA triResolve Margin service to support your end to end collateral process – from margin calculation to settlement – or you would like to find out more, contact the OSTTRA team.

Case study: Collateral automation

The introduction of global uncleared margin rules (UMR) drove the need to address technology requirements for both Variation (VM) and Initial Margin (IM) for our client. We were able to help them in adopting industry standards while ensuring scalability for future business growth and expansion.

➜ Read case study

Are you still manually booking payments & wire transactions?

Leverage OSTTRA triResolve Margin to automate collateral instructions via SWIFT. Clients can instruct an extensive range of settlements, including cash, securities, triparty RQV, interest and cashflows. Benefit from automated SWIFT messaging and connectivity to an extensive network of custodian banks and triparty agents.

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Case study: SWIFT automation for collateral managers

A large regional bank is using our SWIFT automation solution to instruct all collateral transfers via OSTTRA triResolve Margin. Benefits include:

• connectivity to all triparty agents
• support for an extensive set of SWIFT message types
• real-time settlement transparency
• increased operational efficiency
• reduced risk of incorrect bookings & failed settlements.

➜ Read case study

Portfolio Reconciliation Focus

OSTTRA triResolve provides multilateral, proactive portfolio reconciliation with streamlined exception management to help clients mitigate risk, resolve collateral disputes and manage portfolio differences.

New reconciliation trends

Over 2,100 groups are automating their reconciliation process across all asset classes with our growing network. Beyond traditional bilateral OTC derivatives, we’re seeing increased adoption for repo, securities financing, cleared, internal, and exchange-traded products – including collateral holdings and all global repositories. In particular, we’ve observed accelerated growth in both repo and MSFTA reconciliations (the latter following the go-live of the FINRA 4210 regulation in May 2024), and we see increasing demand for our expanded ETD reconciliation capability.

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OSTTRA triResolve Dispute Manager

Margin call disputes are the nexus of collateral management and portfolio reconciliation, and the point at which firms need to be able to quickly identify, prioritise and escalate portfolio differences. OSTTRA triResolve has always helped firms manage underlying differences, and our new Dispute Manager capability takes this to the next level. Clients can now benefit from a systemic dispute process, leveraging workflow & reporting to manage dispute investigation, prioritisation & resolution. Dispute Manager combines margin call data with portfolio reconciliation results to automate the attribution of dispute drivers.

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OSTTRA triResolve Analytics

Analyse trends, themes and difference drivers in MtM exposures & of margin call disputes in your portfolio. By leveraging the underlying portfolio reconciliation data our analytics enable you to analyse and understand what is driving margin call disputes over time and get insight into reconciliation quality and monitor your operational efficiency and regulatory requirements.

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Risk & Valuation Focus

Managing XVA in a changing world: challenges and opportunities

XVA calculations are more critical than ever and essential for managing the true cost of derivatives trading. But outdated tech and increasing demands on calculations are creating challenges. Gemma Bailey, Trade Lifecycle Commercial Director, OSTTRA, explores solutions and the need for greater transparency.

➜ Read article

Case studies: XVA calculations

As firms grapple with these evolving XVA challenges, our global client base continues to expand. Explore our case studies to discover how we’re helping diverse organisations and teams achieve accurate and efficient XVA calculations.

➜ Read case studies

IM Analytics

OSTTRA triCalculate has extended its Initial Margin (IM) analytics service to offer pre-deal checks, stress testing & back-testing. Next on the roadmap is bilateral IM optimisation. Stay tuned for an update in Q1!

Other News

Cash Flow Management

OSTTRA’s Cash Flow Management solution continues to see client and volume growth, with major participants automating the agreement of their periodic payments from open trades. We listened to clients and built links to OSTTRA triResolve and our Settlement Messaging services, allowing us to automate end-to-end where desired.

For live clients, gone are the days of back and forth email exchange agreeing settlement amounts. A bilaterally configurable central matching engine pairs cashflows, shows differences and links to underlying trades and reconciliations. Optional netting functionality allows the compression of these agreed cashflows, to give participants efficient settlement shapes.

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Awards

OSTTRA triResolve Margin was recognised as Best Buy-Side Collateral Management Solution at the 2024 FTF News Technology Innovation Awards.

OSTTRA at PostTrade 360 Nordic

Erik Petri and Neil Murphy discussed how regulation and a changing market environment have increased focus on optimisation challenges, from capital and collateral through to technology and workflows.

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Mexico UMR

We were delighted to host a panel of experts in Mexico City to discuss the upcoming Banco de Mexico margin rules. Many thanks to all the delegates for attending and to our great panellists for making it such an informative event.

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