Through centuries of financial innovation, experimentation, and standardization, dependable collateral has been consistently used to effectively mitigate the credit risk of financial transactions. In a post-crisis financial landscape, regulators are implementing policies that are driving firms to secure financial transactions with increasing amounts of collateral and clear more financial transactions through central counterparties. The diverse range of new requirements, guidelines, and incentives being put in place by regulators are aimed at protecting global financial markets from systemic failure. Reactionary industry debates on the effectiveness of these new measures are now giving way to practical discussions on how individual firms can adjust their business practices to succeed in this new environment.
This white paper contains commentary from Brian Keane, Managing Director, Capital Markets Treasury and Collateral Management at BMO Financial Group, and Ed Ridgway, Global Head of Clearing and Collateral Services within the Global Markets Operations division at HSBC. IBM would like to thank Brian and Ed for sharing their expertise and industry perspectives.