4sight Whitepapers

Global Inventory Management Whitepaper - The Central Nervous System of Financial Institutions in the New Collateral Ecosystem (2017)

Global inventory management has become critical to both buy side and sell side firms transacting in collateralized business lines in recent years.

This paper and infographic by Martin Seagroatt and Gilbert Scherff maps out an architecture for a new more integrated, automated and industralized collateral ecosystem.

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Solving Collateral Whitepaper - BCBS IOSCO Uncleared Margin Rules - How to Adapt (2016)

The forthcoming BCBS IOSCO uncleared margin rules are set to make the collateral management process far more demanding than in the current operating environment.

This paper summarises the rules and looks at some of the challenges they create for collateral managers and operations teams. It outlines some of the system changes that need to take place from a technology point of view and offers a list of key action points firms should start thinking about.

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Buy Side Collateral Management: Challenges and Opportunities (2014)

The current volume of regulatory change can seem overwhelming to many buy side firms trading Derivatives.

The move to trading via CCPs has raised a number of new challenges around the collateral management process that buy side firms must deal with.

This whitepaper covers the issues that many buy side firms are facing around collateral usage.

It looks at the choices the buy side must make, and the challenges to overcome. The paper also looks at new opportunities to reduce costs and generate alpha from effective collateral management.

In addition, the whitepaper argues that efficient, proactive collateral management and collateral optimisation will become a competitive differentiator and a way to maintain fund performance.

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Future Trends in Optimisation: Collateral, Regulatory Capital and CCP Selection (2013)

Financial firms are currently experiencing significant regulatory and cost pressures due to Basel III, Dodd Frank, and EMIR.

This is leading to a search for ways to optimize various aspects of trade types that involve some level of counterparty credit risk (derivatives, securities lending, repo).

This whitepaper looks at how financial firms can optimize trading decisions based on:

•  Regulatory Capital Optimization: What is the cost of capital per unit of P&L? (RWA, CVA, Balance Sheet Usage)

•  Collateral Optimization: What are the Funding Costs?

•  Counterparty Optimization: Is it more profitable to trade bilaterally or via a CCP? If via a CCP then which CCP is optimum?

•  Trade Type Optimization: Can the firm generate more P&L by deploying an asset in a securities loan, repo, or to collateralize a derivative?

The paper discusses how to calculate the different optimization types and how they are interrelated.

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Whitepaper: Collateral Optimisation - Beyond Cheapest to Deliver and the Big Red Button (2013):

This whitepaper discusses some of the latest advances in collateral optimisation techniques. It also details how optimisation has moved on from cheapest to deliver methodology.

In addition, the paper describes some of the limitations around collateral optimization and provides a list of questions financial firms should ask when implementing an optimisation project.

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