HSBC launches OTC clearing collateral service ahead of swap clearing reforms

Automated collateral management will be key under G20 swap clearing rules, due to come into effect for most firms in December this year.

HSBC Securities Services announced the launch of its over-the-counter (OTC) clearing collateral service, to help clients meet requirements of the G20 swap clearing reforms.

The swap clearing rules, which are set to come into effect for most firms in Europe in December this year, will force the buy-side to manage and mobilise collateral through a central counterparty.

HSBCs OTC clearing collateral service provides an “independent and highly automated collateral management service”, with calculation and verification of margins, interest and automated margin payments.

Craig Cowe, head of collateral management product at HSBC Securities Services, said the “incoming regulations to centrally clear OTC derivatives mean that it’s crucial for investment managers to know where their assets are and what they can be used for.”

Cowe added that HSBC has implemented “collateral processing hubs” across Europe and Asia, to ensure clients keep with the regulatory reforms.

Global head of custody and treasury at HSBC John Van Verre, said the regulatory reforms have brought collateral from the back office to the front office, “which requires much more proactive management of positions than historically was the case.”