Collateral Management Target Operating Model
The collateral management industry is one which is rapidly developing due to changes in both industry best practice and the regulatory environment. A particular example of this, which is leading to wide-ranging change, is the move to a mixed cleared and OTC execution environment.
In response to this, the ways in which financial institutions organise their collateral management functions and define their collateral management processes are also undergoing significant change. Alongside these industry developments, collateral management technology capabilities also continue to evolve year on year. Such technology change typically also facilitates or requires changes to business processes and/or organisational structures.
Initial design of both business processes and related organisational structures is undertaken through our Collateral Management Target Operating Model (TOM) definition. This addresses areas such as:
Overall organisation of the collateral management function e.g. overall product mandate
Roles and responsibilities between sub-functions within collateral management e.g. splits across product responsibilities (OTC, repo, securities finance etc) and/or across process functions (margin management, reconciliations, new business etc)
Appropriate centralisation or de-centralisation of collateral management functions across entities and product classes
Split of collateral management responsibilities between operation teams, risk teams and front office teams (e.g. front office inventory management, collateral trading, CVA teams etc)
Definition of the end to end collateral management business processes