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BNY Mellon Urges Buy-Side Companies to Take Comprehensive View of Collateral Strategy 

March 9, 2016

PR Newswire

Buy-side companies are being forced to rethink their strategies due to new regulations which have increased the value of collateral in trading and risk management, according to a new report from global investments company BNY Mellon and London-based consultancy The Field Effect.

The study, Collateral Management: Navigating the Regulatory Maze, argues that buy-side companies are playing catch up with sell-side businesses, which have more than 25 years' experience in implementing sophisticated balance sheet driven collateral solutions. Buy-side companies should rethink their business models in relation to risk, capital considerations and collateral management.

The global financial crisis has led to a new regulatory landscape which presents collateral opportunities and challenges which many market participants have not assimilated into their strategic plans. The implementation of central clearing arrangements, UCITS V and Basel III requirements, and an increasing need for many market participants to source high quality liquid assets (HQLA), are the top priorities for buy-side companies. The direct and indirect impact of regulations vary significantly across both market segments and individual firms, with institutional size, sophistication (business profile, legal structure, operational maturity) and geographical location the most important differentiators, according to the report. Read more

 
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