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Collateral Management
 
The use of collateral, for many years associated mainly with repo and securities lending transactions, has seen a rapid growth within the financial marketplace. The need to reduce exposure in these transactions, as well as the rise of the OTC derivatives market, has led to a significant increase in the degree of complication faced by operations departments.

Successful processing of collateral within an organisation requires knowledgeable staff that understand the component parts that lead to safe and secure processing, as well as awareness of the pitfalls that can result in unacceptable exposures.

By completing the course you will:
  • Understand the main collateral operational flow
  • Learn how to derive collateral values and what impacts such values
  • Be able to look at the risks in processing collateral and the controls to mitigate
  • Appreciate the numerous collateral-related transaction types

Who should attend?

The course is suitable for collateral management personnel who would benefit from understanding the ‘big-picture’, those who have had limited exposure to collateral but who require a greater understanding of the relationships between their work and collateral and those who have recently been transferred to the collateral management department.


Course Director

Mike Simmons is an operations specialist and the Programme Director for ICMA’s Operations stream of training courses. He has been involved with the capital markets and operations throughout his career, focusing originally upon securities settlement and more recently on the broader aspects of operations.

Mike is the author of several books on operations including ‘Securities Operations: A Guide to Trade & Position Management’. In addition to the Collateral Management course, Mike is the Programme Director for the Operations Certificate Programme (OCP), the Securities Operations Foundation Course (SOFC) and teaches various specialist operations courses.

To learn more about this subject, please read the article by Mike Simmons about Collateral Management & how to adopt best market practice in Risk Mitigation.


The course content is divided into several topic areas, which are then broken down into multiple subtopics:


1. Fundamental Collateral Concepts

  • Definition and purpose of collateral
  • Why the increased focus on collateral?
  • Overview of the collateral life-cycle

2. Types of Collateral

  • Cash
  • Bonds
  • Equity
  • Collateral impact on regulatory capital: overview

3. Transaction Types Necessitating Collateral

  • Securities lending and borrowing
  • Repo
  • Secured cash borrowing and lending
  • OTC derivatives
  • Cash borrowing at CSDs and custodians
  • FX
  • Tri-party collateral services

4. Legal Protection

  • Necessity of legal protection
  • Master agreements
  • Definitions
  • Credit support annexes
  • ECB valuation haircuts
  • Confirmations

5. Static Data

  • Concepts of static data
  • Concepts of STP
  • Static data and STP in collateral management

6. The Collateral Life-cycle

  • Pre-trading
  • Trading
  • Throughout lifetime of trade
    • Trade reconciliation
    • Marking-to-market
    • Collateral call calculation
    • Making and receiving collateral calls
    • Collateral substitution
    • Income and corporate actions
  • Trade termination

7. The Collateral Management Function

  • Overview of responsibilities
  • Centralised collateral function
  • Cost centre vs. profit centre

8. Current Initiatives

  • Clearing of OTC derivatives
    • The regulators’ perspective
    • Regulatory changes: overview
    • Central clearing and collateral management




ICE EducationDetails of the next seminar

London
TBC

ICE Education
5th Floor Milton Gate
60 Chiswell Street
London EC1Y 4SA
United Kingdom

Based at ICE Education London offices: IntercontinentalExchange® (NYSE: ICE), is a leading operator of regulated global futures exchanges, clearing houses and over-the-counter (OTC) markets.

Please email education@icmagroup.org to register your interest to attend our next publicly scheduled course.


Costs

The cost is £1,250.00 for ICMA Members and £1,650.00 for non-members.

ICMA Executive Education encourages all member and non-member companies to send multiple candidates on our courses, thereby ensuring that a range of individuals benefit from the experience at the same time. As a result, we are happy to offer the following discounts for multiple candidates:

2 to 4 candidates – 5% discount each*
5 to 9 candidates – 10% discount each*
10+ candidates - 15% discount each*


*Please note that discounts are applied by way of a refund to the organisation when registration has closed and the final number of candidates from the firm has been determined.

The course fee includes all lunches, coffee breaks and training materials.

Payment can be made by secure online credit card or by invoice. Please note that selecting the invoice method will add £50 (administration fee) to the course price. Multiple candidates from the same company can request one invoice, reducing the overall administration fee.


Please note:

The course is a non-residential learning programme, so candidates are responsible for arranging their own travel and accommodation.

Course materials will be provided to candidates in electronic format prior to the start of programme. Please ensure that you have access to this document during the course by either printing off a copy or by downloading it on your laptop, iPad or tablet.

Should you have any queries about the Collateral Management course please contact education@icmagroup.org.




Helene Starklint Henriksen

Organisation: Danske Bank
Job title: Specialist Settlement Officer

Describe what you do on a day to day basis in your job:
Settlement of cash, repo, Triparty, Collateral Management and custody trades in Euroclear. Euclid Administrator.

Reasons for taking the course:

To complete my ICMA Executive Education Diploma and to brush up on my skills, as well as to hear other participants’ views of the current market situation.

Benefits of taking this course:
I learnt about the future plans for OTCs (CCPs), as well as being present for interesting discussions in the group about the benefits and risks connected to Collateral Management.




Alexander Saša Djaković

Organisation: Euroclear Bank SA/NV
Job title: Relationship Manager

Describe what you do on a day to day basis in your job:               

In my role as a Relationship Manager I work with clients to help them make the right decisions and to explain all financial services Euroclear Bank is offers.  A part of my job is also to identify possible sales opportunities and to generate new business, in general, everything that a Relationship Manager has in their “To Do list”.

What challenges do you face in your current role:

Different clients (i.e. Corporates, Broker Dealers, Investors, Regional and Central Banks) all have different preferences.  This leads to a much better understanding and a very deep and constructive view in the “post trade” financial sector.

Reasons for taking the course you attended:

We are faced with the fact that Collateral Management is becoming more and more important for everybody working in the financial sector.  As Euroclear Bank is one of the world’s leading Triparty service providers, we would like to offer even better support to our existing clients and also advise prospective clients on the service available to them.

Tell us how our course helped you in overcoming these challenges:

It was good to see how things get done on a bilateral basis.  A lot of manual work is needed for both the cash giver and taker.  This is exactly the situation where a Triparty Agent should step in.

Benefits of taking this course:

Real benefits will be seen, when new prospective clients have been admitted.

Anything else you would like to add:

It was a good and interesting course.  I also think it would be beneficial to have a course with the title “Do I need a Triparty Agent and if yes, why?” (or something similar).  I think it would be useful for those participants, who are undertaking the work themselves, which requires both time and money.





Michel Joosse

Organisation:
ING Bank
Job title:
Support Officer, Global Collateral Management

Describe what you do on a day to day basis in your job:
At the moment I'm responsible for the execution of the daily margin call process for OTC Derivatives transactions.  Besides margining, this includes tasks such as management reporting and reflecting CSAs in our IT-systems. Furthermore, I'm assisting the CCP collateral team with the daily tasks.

What challenges do you face in your current role:

The main challenge in my current role is to collateralise the exposure of OTC Derivatives transactions with the aim of mitigating credit risk for ING.  The number of sent and received margin calls fluctuates every day and this process needs to be finished before the end of the business day.


Reasons for taking the course you attended:

I took the course to refresh my current knowledge and to get a better understanding about collateral management.  I also wanted to increase my awareness of the risks involved in the processing of collateral.


Tell us how our course helped you in overcoming these challenges:

The Collateral Management course taught me more about the other product silos within collateral management, such as repo and central clearing. The session about regulatory changes helped me to fully recognise the impact of new regulations (i.e. EMIR) on collateral management.


Benefits of taking this course:

Due to the experience of the trainer, Mike Simmons, in several operational areas within Financial Markets, the course is not only about collateral management, but also about the importance of other departments, such as Static Data and Securities Settlements, which happens to be my previous department.  The course gave insights into the complete collateral lifecycle, from pre-trading to trade exposure, collateral calculations to settlements.

Anything else you would like to add:

The course can be interesting for everyone who just started within Collateral Management or who's planning to do so.




Merja Grandell

Organisation: Bank of Finland
Job title:
Back Office Specialist

Describe what you do on a day to day basis in your job:

I’m working in the Back Office team whose responsibilities are to take care of the Bank of Finland’s own reserve investment trade settlements and monetary policy transactions.  The repo collateral monitoring and margin calls account for the work undertaken by the Back Office team.

What challenges do you face in your current role:

Understanding what regulation means for the operations division.  Understanding the agreements in the securities and derivatives business is also important in the Back Office.

Reasons for taking the course you attended:

The financial crisis has increased the importance of collateral and valuation of collateral.  I wanted to update my knowledge of collateral management.  The other reason was that I wanted to achieve the Diploma in Financial Market Operations offered by ICMA Executive Education.

Tell us how our course helped you in overcoming these challenges:

There were very good exercises and discussions during the course which helped me to understand the meaning of collateral and how to use it safely.

Benefits of taking this course:

We had good practical exercises and Mike Simmons is an excellent tutor.  Despite the fact that I am not a native English speaker, I could easily follow the content of the course and do the exercises.

Anything else you would like to add:

It’s always worth attending ICMA’s courses!



 

 

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