Post-trade processing services firm Omgeo has added new capabilities to its Omgeo ProtoColl solution, which provides automated collateral management, to help market participants prepare for global reforms to OTC derivatives trading.
The latest version of Omgeo ProtoColl, which provides a single, holistic view of collateral exposures across bilateral and centrally cleared OTC and exchange-traded, allows users to manage daily margin activity and track all progress during the day. It supports automatic calculation and posting of collateral and the subsequent initial and variation margin movements for all relevant asset classes. Protocoll also supports repurchase agreements and securities lending transactions.
The need for efficiency in managing margin payments was highlighted by Omgeo through a recent report by securities consultancy Finadium, which found that collateral required in the OTC derivatives market alone will see a growth of 41% over the next 12-18 months, partly as a result of the structural changes taking place in the derivatives markets.
“We are seeing increased focus on automated collateral solutions as firms recognise that they need to act now to prepare their internal processes ahead of the implementation of new regulatory mandates including Dodd-Frank and EMIR,” said Ted Leveroni, executive director of derivatives strategy and external relations at Omgeo. “While the regulations are still to be finalised, there will always be the need for both bilateral and cen=trally cleared capabilities and ProtoColl gives clients the ability to manage both from a single platform today.”
From the start of next year, OTC derivatives will be standardised, where possible, so they can be traded on exchange-like platforms and centrally-cleared. The collateral need to secure those trades that remain bilateral will also increase. The rules are being implemented via the Dodd-Frank Act in the US and the European market infrastructure regulation in the EU.