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New regulations and financial market change mean firms must adapt to survive in brave new collateral management world, according to BNY Mellon/Field Effect paper 

October 16, 2015

Tim Steele, Market Watch

Firms that fail to address a range of 'fundamental' strategic questions around changing collateral management requirements will find themselves at a disadvantage when it comes to supporting their future funding and investment needs, according to a new white paper co-authored by BNY Mellon, a global leader in investment management and investment services, and London-based consultancy The Field Effect.

The reformation and restructuring of the financial markets in the aftermath of the global financial crisis has had a profound effect on how collateral is used and managed. These ongoing changes to collateral supply and demand dynamics are challenging even the most sophisticated and experienced organisations, with many firms (both financial intermediaries and asset owners) struggling to grasp the full implications and potential opportunities of the new landscape.

The new paper – Collateral Management: A Review of Market Issues– argues that consolidation is "a highly likely outcome" and collateral management will evolve from being primarily a process of managing assets for margin purposes, to a position where much greater consideration is required to manage assets from a collateral value, cost and balance sheet perspective.

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