The development of OTC derivatives collateralization can be traced back over 15 years and its progress appears to dovetail with the various financial disasters that have hit the global and regional communities during that time. It would not be an overstatement to say that these periodic financial crises have helped to promote collateral managers and collateral management to the frontier of risk mitigation.
However, there are many challenges for participants. Even aside from the considerable regulatory pressure around high-profile topics such as centralized clearing for derivatives and the need for unambiguous segregation of collateral, there are many aspects to collateral management that are already a 'work in progress.'
Challenges
Many firms today wish to perform cross-product margining. For some, this means managing various margining programs on the same platform, using the same staff, e.g., collateral managers are often simultaneously looking after repo and securities lending margining as well as ....