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The collateral crisis? 

January 23, 2014

As the global financial crisis unfurled over the last five years, discussions about risk were propelled to the top of the agenda for most financial institutions.

One result of this heightened focus on understanding and managing risk has been a new holistic approach, with middle and back offices no longer exclusively handling risk management and compliance.

The front office now plays an active and important role, one which is also required by recent changes to the regulations governing risk. For example, the Dodd–Frank Wall Street reform and consumer protection actand European Market Infrastructure Regulation (EMIR) have introduced a new central clearing process to over-the-counter derivatives trading to limit counterparty credit risk. In light of this new regulation, traders are now finding themselves managing requests for collateral and handling margin calls from central counterparties.

Read more: FOW

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