HSBC Private Bank is among more than a dozen financial institutions to sign up as early adopters of a new Bloomberg collateral system designed to help firms tackle new margin rules taking effect in March.
Bloomberg said on Wednesday its MARS collateral management programme is meant to assist banks, investment firms and corporations with the collateral management and reconciliation processes required to comply with the margin rules that apply to non-cleared swaps in March.
“It's a business imperative to trade these types of instruments, so compliance too becomes a business imperative,” said Kpate Adjaoute, managing director at HSBC Private Bank. “We anticipated these reforms were coming. It helps to centralise the process and have access to the data we need as well as the counterparties with whom we trade.ˮ
The new rules are intended to reduce systemic risk, but also to lessen the operational and compliance burden for investors.
Phil McCabe, global product manager for collateral management at Bloomberg, stressed the challenges investors face in the over-the-counter (OTC) derivatives market “cannot be addressed with software alone".
Bloomberg said MARS allows customers to centralise their collateral management workflow and automate how they manage and monitor risk exposure and collateral positions.
The new platform offers cross-product, cross-asset support for Dodd-Frank and European Market Infrastructure Regulation compliance, legal documentation capture, automated messaging, risk analytics and portfolio reconciliations, according to the firm.
“The need for simplification and automation of risk and compliance processes has encouraged adoption of cloud-based technologies and managed services,” said Hugh Stewart, research director at Chartis Research, a tech consultancy.
Bloomberg also said on Wednesday it has licensed the standard initial margin model (SIMM) for calculating initial margin to help trading desks and collateral managers calculate the amount of collateral that needs to be posted.
Firms in the $200 trillion market for non-cleared OTC derivatives must adhere to stricter requirements from March.