State Street Corporation, a provider of financial services to institutional investors, has expanded its relationship with Paternoster, the insurance company that takes responsibility for the risks associated with companies’ final salary/defined benefit pension schemes.
In addition to custody and securities lending, State Street will now provide Paternoster with collateral management services.
“Collateral management is particularly important given our complex liability-driven investment style,” said Mark Wood, Paternoster’s chief executive. “We trust State Street to help us achieve our aim of delivering the best possible returns whilst minimizing risk and cost effectively.”
In response to increasing demand from institutional investors who use derivatives in their portfolios, State Street’s collateral management services are designed to help manage, track and provide reports on collateralized transactions, allowing users more time to devote to achieving investment returns.
“Our relationship with Paternoster is a strong indication of our success in what is a vital market segment for us,” said Alasdair Reid, head of State Street’s asset owner group in the UK. “Following recent market volatility, we expect more and more closed defined benefit schemes to transfer their liabilities to the bulk annuity market. As this happens, providers like Paternoster will become increasingly significant players in the financial services industry. In growing our relationship with Paternoster we are delighted to build upon the strong foundation we have established.”
Collateral management gives customers the ability to securely and independently monitor collateral while maximizing investment flexibility. The product’s collateral management reporting feature permits customers to define customized collateral parameters, including eligibility of collateral, margin requirements and concentration limits.