Lombard Risk Management plc ("Lombard Risk") a leading provider of integrated collateral management, regulatory compliance and reporting solutions for the financial services industry, announces its collateral optimisation module for COLLINE.
COLLINE - collateral management and clearing is designed by experienced business practitioners and provides end-to-end, cross-product (OTC derivatives, repo and sec lending) collateral management and clearing. COLLINE is a consolidated solution for mitigating exposure risk while satisfying the growing demand for multiple/global entities, cross-product margining, clearing, initial margin calculation, optimisation, master netting, MIS reporting, dispute management and electronic messaging.
The changing regulatory environment is creating increased demands for collateral in both the cleared and uncleared markets, across all financial products. As a result there are direct and increasing pressures on both the availability and cost of collateral.
John Wisbey, CEO, Lombard Risk explains: "Collateral is simultaneously becoming more expensive and harder to source, creating the so-called 'collateral squeeze'. COLLINE's optimisation module enables real-time determination of the most optimal asset to be used, in any scenario, according to user-defined and evolving priorities."
Lombard Risk COLLINE optimisation module incorporates real-time algorithmic calculation of optimal inventory utilisation and collateral allocations to:
• Improve liquidity by optimising use of all available assets, across all business lines
• Reduce the cost of collateral programmes by calculating 'cheapest to deliver'/'most expensive to hold'
• Match client investment strategies, and adapt to changing market conditions and business priorities
• Reduce the operational burden of collateral allocation processes
• Bring the providers and consumers of collateral together utilising a single technology platform
The flexible design is intended for use as both a front office and back office tool, for firm-wide and cross-product inventory consolidation and optimisation, and as an integral operational tool to ident identify the best asset to use in response to a margin event.
COLLINE 0ptimisation provides an interactive user interface, with configurable rules and goals that allow the user to define 'optimal' in their own terms - according to individual business drivers, priorities, investment strategies or constraints. As such COLLINE optimisation can be used by any firm, large or small, and can be flexed to respond to changing priorities over time. Flexible functionality will include extensive data simulations for detailed scenario analysis ('what-if') and integration with proprietary cost models.
Elaine MacAllan, Product Development, COLLINE, Lombard Risk adds: "Optimisation now appears in most firms' top 3 strategic priorities, although the business drivers, priorities and definitions of 'optimal' vary widely. Accordingly we have focussed on developing a highly configurable rules-based solution, maximising the use of our consolidated inventory management capabilities on a single platform, for the benefit of both the front office from a strategic asset utilisation perspective, and the back office from an operational cost and efficiency standpoint."