Omgeo, the global standard for post-trade efficiency, today announced that Omgeo ProtoColl, its automated collateral and margin management solution, now offers collateral optimization capabilities to service the unique needs of financial services firms worldwide.
The enhanced functionality helps users make more effective use of their existing asset inventory in light of emerging initial and variation margin collateral requirements imposed by the Dodd-Frank Act and European Market Infrastructure Regulation (EMIR).
Dodd-Frank and EMIR have introduced central clearing mandates and increased margin and collateral requirements that are triggering a spike in demand for collateral, as well as more stringent eligibility criteria for posted collateral. As a result, the industry is facing the possibility of a collateral shortage. Firms now require greater understanding of how best to use their existing asset inventory as collateral to maximize efficiency and decrease costs and risk.
With Omgeo ProtoColl, firms can manage their margin and collateral calls across their entire trading operation, enabling them to make smarter, more effective use of all of their collateral. ProtoColl's collateral optimization functionality, the first designed specifically for asset managers, allows users to create sophisticated rules-based algorithms as well as define preferences and rules for determining the quality and importance of various forms of assets to be used for collateral. The solution recommends which assets to use, and determines a usage priority based on those preset rules.
ProtoColl's latest version also includes a browser-based management dashboard, giving users a real-time view of collateral management activities, including collateral dispute status, uncovered exposure and counterparty risk positions.
Additional enhancements to ProtoColl include support for the Legal Entity Identifier (LEI) and the CFTC Interim Compliant Identifier (CICI) and reference agreement functionality that simplifies the process of setting up and maintaining existing agreements with counterparties.
"Increasing collateral and margin requirements, coupled with a shorter list of eligible collateral instruments, will likely result in a collateral shortage. As a result, many buy-side firms face an overriding need to be able to optimize their use of existing collateral, before even considering the transformation process," said Ted Leveroni, executive director of derivatives strategy and external relations at Omgeo. "ProtoColl provides a holistic view of collateral that is both needed and available, allowing firms to optimize what they have and ensure they are making the best possible use of their resources."
Cubillas Ding, research director at industry analyst firm Celent, adds, "As firms face an increasing crunch in the supply of high-quality collateral, it will become increasingly important for firms to ensure that they squeeze out and maximize operational efficiencies through the intelligent deployment of automated collateral management solutions. Making smart and timely decisions around the sourcing and placement of collateral has never been as critical as it is now."
ProtoColl is an end-to-end collateral management solution complete with sophisticated workflow that streamlines the collateral process. It offers one-stop collateral management, from collating data, through calculating and publishing calls, managing disputes and reconciliations, to sourcing and delivering collateral.