Northern Trust launches collateral optimisation capability as UMR bites

Integration with margin and risk management specialist Acadia to support clients with global regulations governing trading of OTC derivatives.

By Jonathan Watkins

Northern Trust has launched an automated solution for initial margin calculation to help asset manager and asset owner clients comply with the latest round of uncleared margin rules (UMR).

The solution was developed as part of Northern Trust’s integration of Acadia’s margin management solutions and uses algorithmic technology to identify and deploy assets to meet regulatory requirements.

The custodian becomes the latest to launch a service alongside margin specialist Acadia to support clients through the rigorous UMR rules after State Street made a similar move earlier this month.

Through the partnership, Northern Trust will leverage algorithmic technology to identify the best assets available to meet regulatory eligibility requirements. The solution identifies optimal assets to be deployed to meet margin obligations.

“Our integrated global architecture and investments in core technology allowed us to build a unified solution for all collateral clients and is a great example of our technology vision at work,” said Pete Cherecwich, president of corporate and institutional services at Northern Trust. “By investing the time and technology up front, we can deliver solutions that offer agility, automation, and long-term value.”

Phase 5 of the uncleared margin requirements (UMR) hit investment firms with OTC derivatives of over $50 billion in average aggregate notional amount (AANA). The phase was expected to bring over 300 entities into scope. Phase 6 will be implemented in 2022.

“A key differentiating feature of this initiative is that our investment in technology architecture allowed us to identify, integrate, test and launch the solution in full ahead of the regulatory deadline,” said Nadia Ivanova, head of C&IS business services and North America asset servicing chief operating officer at Northern Trust. “By pairing this solution with our other derivatives enhancements, we’ve been able to automate previously manual processes for faster processing and greater accuracy.”

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