Collateral Management

New Regulations, Operational Challenges and Collateral Optimisation

Agenda Program
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Prague, NH Hotel Prague
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Regulatory Reforms and Collateral Management
Legal and Credit Issues in Collateral Management
The Collateral Management Process
Real-Time Valuation of Collateral
Re-Use and Re-Hypothecation of Collateral
Collateral Optimization and Collateral Transformation
Gaining a Competitive Edge through Efficient Collateral Usage
Expanding Client Service Offerings in Collateral Management
Optimizing Regulatory and Economic Capital Usage
The purpose of this seminar is to give you a thorough introduction to the collateral management process and a good understanding of how the use of collateral can be optimized and integrated with trading, liquidity management, credit risk, market risk and finance activities.

We start with general introduction to collateral management and a review of the market and regulatory developments that have radically changed the way that financial services organizations view collateral management. We also present a case study that we shall be revisiting throughout the seminar as practical illustration of how to effectively implement the collateral management process. We look at important new regulations such as EMIR and Dodd-Frank and discuss the possible impacts that these regulations will have on banks'' and other institutions' use of collateral and, more broadly, on their business models and business conducts.

We then explain the process of collateral management. We suggest policies for choosing collateral and explain how this collateral is effectively managed throughout the collateral lifecycle. We also discuss important legal and documentation issues relating to collateral, including the use of ISDA documentation.

On day two, we first turn our focus to collateral optimization techniques, explaining how to ensure that collateral assets are deployed as efficiently as possible. This includes methods for reducing "collateral fragmentation", effective re-use or re-hypothecation of collateral, and the use of collateral swaps to obtain more efficient allocation of scarce, high-quality assets.

Finally, we explain how banks and other institutions can gain a competitive edge in securities and derivatives trading through efficient collateral usage and how the business opportunities that arise from the increasing need for collateral solutions can be harvested. We also discuss how banks can optimize the use of regulatory and economic capital under the "new collateral paradigm".

Program of the seminar: Collateral Management

The seminar timetable follows Central European Time (CET).

09.00 - 09.15 Welcome and Introduction

09.15 - 12.00 Collateral Management - Introduction and Recent Developments

  • Why Effective Collateral Management has Become more Important
    • Growth and increased complexity of OTC markets
    • Post-Crisis regulatory developments
  • Challenges and Opportunities in Collateral Management
  • Presenting the Case Study: "Collateral Management at NoHope Bank"

Credit Issues, Regulatory Reform and Collateral Management

  • Transactions that Involve Counterparty Risk
  • Measuring Counterparty and Settlement Risk
  • Highlights of the New Regulations Designed to Reduce CP Risk
    • Basel III, EMIR, Dodd-Frank,....
    • Regulatory treatment of cleared (CCP) and non-cleared trades
  • Margining Concepts
    • Initial margin, haircuts, thresholds MTA's
  • Possible Market Impacts
    • Bifurcated market model, greater complexity and scarcity of collateral
  • The Impact of Collateral on Regulatory Capital
  • Operational Challenges and How to Overcome them
    • Liquidity restrictions, real-time valuations, TR reporting, ......
  • Case Study Revisited

12.00 - 13.00 Lunch

13.00 - 16.30 The Collateral Management Process

  • Establishing a Policy for Eligible Collateral
  • Managing Collateral Process Flows
    • The collateral lifecycle
    • Key players and the roles
    • Moving collateral
    • Real-Time revaluations (Mark-to-market)
    • Corporate actions
    • Substitutions
  • Handling the Legal Issues Relating to Collateral
    • Master Agreements, Schedules and Confirmations
    • Credit Support Annexes
  • Establishment of Collateral Management Risk Guidelines
  • Managing Operational Risk
  • Case Study Revisited

09.00 - 09.15 Recap

09.15 - 12.00 Collateral Optimisation

  • Why Individual Institutions May Experience Collateral Scarcity
  • Informational Requirements of an Advanced Collateral Management System
    • Collateral positions, collateral costs, collateral requirements
    • Settlement procedures
  • Efficient Allocation of Collateral (Reducing Internal Collateral Fragmentation)
  • Improving Access to Collateral (Reducing External Collateral Fragmentation)
  • Risks in Collateral Optimization
  • Re-use and Re-Hypothecation of Collateral
    • Trading collateral assets in order to generate an extra profit
    • Using collateral assets to collateralise own transactions.
    • Reducing the funding liquidity requirements of financial institutions,
    • Using same collateral to support more than one transaction
    • Risk of re-using and re-hypothecating collateral
  • Collateral Transformation (Collateral Swaps)
    • Differences between collateral optimization and collateral transformation
    • The demand for collateral transformation
    • Using collateral swaps to obtain more efficient allocation of scarce collateral
    • Risks of collateral transformation
  • Case Study Revisited

12.00 - 13.00 Lunch

13.00 - 16.30 Business Efficiencies and Opportunities in Collateral Management

  • Securing Operational Efficiency in CM
  • Amalgamating Exposure and Collateral Management Across Business Lines
  • Integration CM Between Business Functions
    • Shifting to a proactive, intraday approach across front office, finance, operations, and credit and market risk functions.
  • Optimizing the Use of Regulatory and Economic Capital
  • Adapting the Business Model to Exploit the Changing Business Opportunities within an ERM Framework
  • Identifying Opportunities to Expand Client Service Offering Via Portfolio Netting and Increasing Portfolio Mix
  • Obtaining a Competitive Advantage by Efficiently Managing Margin across Cleared and Non-Cleared Products

Evaluation and Termination of the Seminar

Training catalogue in PDF
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