BNP Paribas Securities Services has joined the list of collateral management providers with the launch of Collateral Access, as new OTC derivatives rules take effect in US and Europe.
The global custodian, with over US$7 trillion of assets under custody, is offering what it says is a “tailor-made” suite of services to both buy-side and sell-side clients.
Collateral Access is aimed at helping mitigate risks, optimise allocation and manage collateral when trading swaps, both cleared and non-cleared.
Hélène Virello, head of collateral management at BNP Paribas Securities Services, said Collateral Access was an end-to-end service, helping clients from trade capture to settlement.
“We are seeing increasing demand from clients to support them with a solution through the entire transaction process,” she said. “Our goal is to cover the process from the beginning to end.”
One of the features of Collateral Access allows clients to conduct electronic affirmation and confirmation of trades to minimise operational risk, and another helps clients post the right type of collateral.
BNP Paribas also provides collateral protection, meaning clients are able keep assets in a segregated account, independent from buyer and seller.
“When something is scarce, you need to manage and allocate it wisely,” Virello said. “For the clients that don’t have collateral, we will be helping them with this. We can finance cash or equities, depending on what they need.”
Firms have been launching a number of services to help asset managers source and manage collateral, as market participants are bracing for a shortage of high-quality collateral because of regulatory changes.
Under the US’ Dodd-Frank Act and the European market infrastructure regulation (EMIR), swaps trades must be central cleared, thereby requiring institutional investors to post initial and variation margin with central counterparties (CCPs) for the first time. This is coupled with tougher global capital adequacy rules for banks under Basel III.
As regulation takes effect on both sides of the Atlantic, Virello said Collateral Access would continue to evolve.
“We are working with clients, industry workgroups and CCPs to see how the regulation will continue to shape the industry,” she said.