RBC I&TS Launches Collateral Tool for UCITS and UCITS ETFs

RBC Investor & Treasury Services has launched a solution to monitor and stress test collateral liquidity to help firms comply with new collateral requirements as prescribed by the European Securities Markets Authority (ESMA).
By Janet Du Chenne(59204)
RBC Investor & Treasury Services has launched a solution to monitor and stress test collateral liquidity to help firms comply with new collateral requirements as prescribed by the European Securities Markets Authority (ESMA).

The ESMA Guidelines outline quantitative and qualitative criteria that UCITS and UCITS exchange traded funds (ETFs) must meet when entering into over-the-counter (OTC) derivatives transactions and efficient portfolio management (EPM) techniques.

The purpose of the requirements is to reinforce investor protection and transparency, mitigate counterparty risk and harmonise regulatory practices across Europe.

RBC Investor & Treasury Services’ Collateral Risk Report will monitor and measure the eligibility and diversification of collateral received in relation to OTC transactions and EPM techniques. The tool will also provide liquidity stress testing whenever a fund’s aggregated collateral exceeds 30% of the fund’s Net Asset Value, in accordance with the ESMA Guidelines.

Commenting on the launch, Joanna Meager, global head, Client Operations and Head, Investor & Treasury Services UK, said: “New regulations are driving clients to reconsider the way they manage their collateral and associated reporting processes. Our Collateral Risk Report helps users to meet these evolving requirements while optimising operational efficiency, mitigating risks and reducing costs.

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