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Panel: The evolving role of collateral

Release date: 03 Feb 2020 | Eurex Exchange

Panel: The evolving role of collateral

HSBC on Collateral Management and Derivatives Clearing

Clement Cordier,
Head of Derivatives Clearing Services
at HSBC France

This year’s Derivatives Forum in Frankfurt dedicates an entire stream on Capital & Collateral Efficiencies. We are pleased to have Clement Cordier, Head of Derivatives Clearing Services at HSBC France to share some of his thoughts on the evolving role of collateral management and how HSBC is leveraging those opportunities.

Since the financial crisis, many firms have been looking differently at their treasury and financing functions in order to seek more efficient solutions for managing their liquidity and collateral. Driving factors for these changes, include operational challenges stemming from changing market practices and growing volumes, regulatory influences and pressures, and the development of more strategic collateral management approaches from both CCPs and other providers such as HSBC. And while the central clearing of OTC derivatives transactions through CCPs has reduced systemic risk in collateral management, it has also led to new challenges in other respects, such as increasing the total amount of collateral required.

Collateral represents a scarce commodity, and thus what is central to many clients’ requirements here is the protection of their collateral and its potential transformation in order to enhance liquidity and efficiency.

While collateral protection and security will always be the priority, the potential for transformation can really add value to clients. This is an area that buy-side clients would not previously have had to show a great deal of concern over yet is now becoming increasingly critical. Judging how collateral should be used is now a key part of the investment decision-making process for many fund managers in a way that it was not previously. And increasing complexity in the clearing environment is only adding to these potential burdens in terms of time and other resources.

Clients who are unable to obtain clearing member access to CCPs will still wish to clear their derivatives on terms that resemble, as closely as possible, those available to institutions with full membership. This means they are seeking to optimize, among other factors, asset segregation, collateral pass-through, and CCP valuation, without taking on the full risk and liquidity burdens of maintaining full clearing membership.

Join Clement Cordier, Head of Derivatives Clearing Services at HSBC France and the entire HSBC team at the Derivatives Forum Frankfurt 2020 on Feb 27 to hear more about the evolving role of Collateral Management and the impact on buy side firms. The Derivatives Forum Frankfurt 2020 is a full day of discussions, thought leadership insights, industry debates and networking with peers.

Panel Discussion: The evolving role of collateral

Post-crisis regulatory reform has dramatically increased the requirement to manage collateral at a time that cost pressures have forced financial institutions to seek out efficiency.

  • What are the best practices in collateral efficiency today?
  • New ways of thinking about the cost of collateral.
  • The role of Artificial Intelligence, Machine Learning and Robotic Process Automation in Collateral Management


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