BNP Paribas Securities Services, a custodian with USD 10 trillion in assets under custody, announced that is introducing a triparty collateral management service that connects collateral takers and collateral givers and helps unlock liquidity pools.
The move comes as new regulations and practices require market participants to collateralise their financing and OTC derivative trades to manage counterparty risk. This is prompting market participants to look for sophisticated collateral management solutions, which enable them to mobilise their assets quickly and use a wider range of securities to back up their trades.
Patrick Colle, General Manager of BNP Paribas Securities Services, said:
BNP Paribas Securities Services has a strong and diversified client base, which puts us in an ideal position to ease the circulation of collateral between buy and sell-side market participants as well as central clearing counterparties – something that few collateral platforms do today. Our objective is to create a community of collateral takers and collateral givers to develop a comprehensive pool of liquidity and remove bottlenecks in the sourcing of collateral.
Hélène Virello, Global Head of Collateral and Valuation services, at BNP Paribas Securities Services, commented:
We have worked closely with our clients to build a comprehensive service that enables them to manage their collateral easily and efficiently. Our solution makes the most of our extensive custody network to enable us to mobilise collateral quickly and securely, when and where it is needed. The service uses the latest technology and flexible algorithms to enable clients to monitor their collateral needs in real time thanks to intuitive dashboards, anticipate their future funding requirements, and set parameters based on specific allocation strategy requirements.
As a tri-party collateral agent, BNP Paribas Securities Services handles its clients’ collateral needs, from net exposure calculation, automatic collateral allocation and substitution, to physical settlement and custody of these assets.
The service also comes with innovative features such as the ability to provide access to segregated markets, therefore enabling clients to access previously untapped sources of collateral. Furthermore, as a global and local custodian, BNP Paribas Securities Services is able to give clients the opportunity to source collateral directly on the domestic markets in which they invest, therefore alleviating the burden of constant collateral inventory management.
The service enables clients to manage their collateral needs for all asset classes and all types of collateralised trades, helping them enhance operational efficiency. The service is now live.