BNP Paribas Securities Services will extend its collateral management service to include centrally-cleared OTC derivatives introduced by new regulation, helping institutional investors reduce the associated costs and complexities.
Institutional investors have historically been used to dealing with normal non-centrally cleared OTCs. However, the introduction of the Dodd-Frank Act in the US and European Market Infrastructures Regulation is set to drive a significant number of OTCs onto electronic platforms and cleared by central counterparties.
The new regulatory environment, while undoubtedly the best thing for our clients and the longevity of the financial markets, is still viewed with some trepidation by many in the industry, Helene Virello, head of collateral management at BNP Paribas Securities Services, says. Indeed the changing environment does present a challenge to some market participants who are not best equipped to deal with certain changes, but that is where BNP Paribas can help its clients get ahead of the competition.
Delivered via a real-time view of both centrally and bilaterally cleared trades, BNP Paribas service helps institutional investors manage both collateral and risk measurement across multiple counterpartiesdealers, clearers and CCPand changing eligibility requirements.
Centrally-cleared OTC derivatives is one such area and institutional investorsfor all their expertise in using OTC productshave simply never had to deal with clearing them centrally, Virello, who is also in charge of OTC independent valuation services at the bank, adds.
We are delighted to simplify the clearing process on our clients behalfa critical factor in helping them avoid the associated funding costs and increased complexities, ultimately allowing them to concentrate on their core business activities, Virello says.
The service is scheduled to be fully operational in the first quarter of 2012.
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(CM)