Northern Trust has added a new solution called Collateral Balance Reporting to its Passport Web portal, which allows custody clients to monitor the amount, location and status of collateral, including counterparty exposures.
The system utilizes Northern Trusts straight-through processing environment for client collateral on its global operating platform. Instructions for collateral, whether active or passive or pledged by the client or a broker, are electronically conveyed to Northern Trust, processed and reported to clients in real time. Client reports identify the securities used as collateral, total amounts of collateral pledged or received, types of transaction for which the collateral is used and all counterparties, the firm says.
“Over the past few years, heightened market volatility and risk have increased demand for transparency into the collateral process, including details on the quality of collateral and counterparty exposure,” says Paul Jezek, collateral platform manager for Northern Trust. “As the use of collateral increases to support sophisticated investment strategies, Northern Trust has leveraged its decades of experience in settlements and reporting to build a flexible and agile system to handle the lifecycle of these complex transactions.”
The system now includes electronic capture of collateral instructions and maintenance of collateral; enhanced collateral tracking with counterparty information for exposure reporting that will tell users what, where, how much and why collateral is being used; supports tracking and reporting for rehypothecated securities; and client reporting on collateral positions on a real-time and historical basis.
“We recognize our clients need for transparency in order to manage their risk,” says Paul d’Ouville, head of global product management at Northern Trust. “These enhancements are vital to providing our clients with the necessary tools to track exposure to counterparties during uncertain market conditions.”
(CG)