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Buy-side Collateral Management - Challenges and Opportunities

The current pace of regulatory change can seem overwhelming to many buy-side firms trading Derivatives. The move to central clearing of some OTC products has raised a number of new challenges around the collateral management process that buy-side firms must deal with.

This paper considers the impact of changing approaches to collateral usage, as firms must define their target operating models and leverage available technological benefits, most notably software as a service (SaaS). Regardless of whether you see opportunities or challenges in this changing landscape, proactive collateral management and optimisation will be a competitive differentiator, a method of reducing costs and minimising performance drag. Institutions that take an active approach and see collateral management as a core competency will outperform those taking a more passive stance.