Wall Street Systems Inc., a leading provider of global treasury and capital markets solutions, today announced the launch of its Collateral Management module, which allows banks to extend their trading relationships with customers, particularly in relation to FX, and to trade with institutions that wouldn't necessarily meet the criteria for a credit line. With the collateral management module from Wall Street Systems, organizations can automatically establish a limit for clients utilizing pledged collateral, allowing them to easily establish and monitor trading activity with these customers.
Once collateral is pledged, banks can decide which instruments to offer the customer for trading. These are most commonly FX products due to the lower risk factor, but can also be derivative transactions such as currency options and interest rate derivatives. The Collateral Management module from Wall Street Systems measures the value of a counterparty's transactions against the value of the collateral that they have placed with the bank, in real-time, for all market products, on a global 24x7 real-time basis and provides the facility to apply haircuts and margin when required.
Reporting and reconciliation are fundamental features of the module to allow organizations to easily identify and track potential problem counterparties. Risk managers, sales managers and relevant subscribers are sent risk alerts for under-collateralized counterparties, either internally within the system or externally via other applications such as e-mail, letting them take action before problems occur. The Collateral Management module has easy-to-use, on-line research tools that identify the cause of under-collateralization at a trade-by-trade level, thereby reducing the time and effort associated with reconciliations.
The Collateral Management module also allows existing customers to leverage The Wall Street System® treasury and capital markets solution Credit module, which measures credit and settlement risk at counterparty, country, industry and rating levels for all markets in real-time, across multiple dealing rooms. This allows for a holistic approach to customer risk monitoring and management.
The Collateral Management module can be used to consolidate collateral and derivatives from third-party front-end systems using standard APIs. The module also allows for the direct input of any form of collateral and provides the facility to link collateral to a specific counterparty.
Mike Thrower, director of marketing at Wall Street Systems states, "Collateral Management is a crucial element to managing counterparty and credit risk and is becoming increasingly important for banks with the onset of regulations such as Basel II, and the need to reduce risk against multiple transactions across different asset classes and portfolios and to make capital savings. The new module from Wall Street Systems makes it simple for organizations to extend trading relations with customers and easily value any type of collateral in real-time, providing an effective means of managing counterparty and credit risk."