Central Securities Depositaries (CSDs) have become greater players in the collateral management world, taking on bigger roles as tri-party agents, collateral movers and educators, finds a survey from Finadium.
Out of 18 CSDs, the majority (72%) have changed their collateral management services, either by launching or expanding their offerings since 2012. No CSD has removed or shut down a collateral management service either.
The survey also found that while the CSDs have not changed their core services much over the last three years, market participants have accepted that they are more than suppliers of settlement and custody.
“CSDs are introducing a new way of doing business; in some markets it can be challenging to convince participants that the CSD offering is better than the status quo,” the survey says.
“In developed markets the competition may be the choice of bilateral transactions or another tri-party provider. In emerging markets the competition is almost always a bilateral transaction.”
The survey also suggests CSDs are benefiting from a ‘network effect’, in which large market participants are encouraging other users to sign on to CSDs for collateral management.
Furthermore, it finds that 82% of CSDs are seeking new partnerships with other CSDs and service providers in collateral management.
“The recognition is that collateral management is a team effort, both domestically and globally,” it says.
CSDs Take On Greater Collateral Management Role, Finds Finadium
Out of 18 CSDs, the majority (72%) have changed their collateral management services, either by launching or expanding their offerings since 2012. No CSD has removed or shut down a collateral management service either.