Buyside collateral outsourcing: Running out of time?

I was at a buyside collateral conference a week or so ago (running a workshop), and asked the audience - mainly European asset managers and financial institutions - what their firm was doing about the upcoming regulations. Over half of the buyside firms plan to build solutions to meet their future collateral requirements, with only a third planning to buy 3rd party solutions. Surprisingly, only 11% of participants plan to outsource any collateral processing to their broker or Futures Commission Merchant (FCM). In our opinion, this may change as the deadlines get closer and buyside firms realise they are running out of time to build or buy.  

Triparty custodian firms are another potential outsource route, offering a range of outsourced collateral management services. The trick is to work out how all of these build, buy and outsource options fit together to support the business vision.

The right answer for many firms could be a combination of all three – so being clear on the target business operating model is fundamental, as is developing a clear roadmap to deliver the target state. But with regulatory deadlines getting ever closer, it’s now a race against time for the buyside to implement their chosen solutions (whatever they may be) and ensure that they will thrive in the new regulatory landscape.