Collateral management is the process through which counterparty exposure is decreased. It is normally used with over-the counter derivatives like swaps and options.
Implementing a collateral management processes can be time-intensive and costly exercise. P-Solve has an extensive history in ensuring that all aspects of the process are dealt with efficiently and to the benefit of the client. We can advise on each step of the process including custodian search, most efficient form of collateral, legal documentation, frequency of calls and settlement of collateral.
Collateral Management is an essential part of an institution's framework for risk and regulatory compliance. It is the most appropriate tool to mitigate credit risk from counterparties.
In the current market environment many firms will only deal with counterparties who can support complex collateralised arrangements and manage large and diverse trade portfolios. Collateral managers must be able to handle daily margin calls which operate to tight schedules, have strong management procedures, and have the ability to present qualitative data in the event of disputes.
P-Solve has a dedicated team and proprietary systems to handle the collateral arrangements for our clients. We act as collateral manager against a number of banks, we ensure that all collateral calls are checked, instructed and settled in a timely fashion.