Citi has introduced new custody services for segregated collateral accounts. This new capability adds to Citi’s existing agency collateral management service, OpenCollateral and is an expansion of the Citi OpenInvestor suite of investment services.
Responding to emerging regulatory requirements, the new service helps its clients to support new requirements under Dodd-Frank and European Market Infrastructure Regulation (EMIR) rules. The rules require clients to better mitigate counterparty risk and improve collateral efficiency.
For tri-party account control arrangements (ACA), Citi will act as an intermediary between the pledgor and the secured party, holding pledged collateral in a segregated custody account. Within the terms of each ACA, Citi’s new solutions allow pledgors to instruct transactions on the collateral account and secured parties to monitor pledged collateral positions in a highly automated manner.
“The possibility that every OTC relationship may need collateral accounts under new regulations has driven client demand for more efficient solutions,” said Chandresh Iyer, managing director, Investor Services, Citi. “These services draw upon our deep understanding of relevant business issues to streamline the technical and operational challenges of managing all types of collateral assets across multiple counterparties.”
Citi’s suite of new collateral custody solutions also offers clients features for:
• Automated Substitution Control – for rapidly changing collateral portfolios, this facility enables automated processing of substitution transactions whilst maintaining collateral values above the agreed initial margin level.
• Collateral Monitoring – for complex collateral portfolios, Citi can provide daily collateral monitoring that incorporates full eligibility testing, concentration limits and haircut schedules.
• Margin Manager Cash Reinvestment – for Citi clients with US dollar onshore accounts, Citi offers a program to reinvest cash collateral into money market funds through a central online portal.