The Bank of New York has rolled out a service which automatically pools and allocates collateral according to client need.
The approach, which the bank has dubbed dynamic continuous optimisation (DCO), uses a proprietary algorithm to optimally allocate a client's available collateral to satisfy its obligations.
The process, which can be tailored on a client-by-client basis to adhere to business or relationship parameters that may apply to an account, ensures that each security is optimally utilised, relative to all other available securities, even as the pool of available collateral changes throughout the day.