Risk Management Experts
Key topics
Enterprise Collateral Management, Collateral Optimization
Biography
Ted Allen has been at the forefront of collateral management activity and thinking for over 15 years. As vice president for collateral management, he is responsible for the strategic development of SunGard’s Enterprise Collateral Management solution suite. In previous roles prior to joining SunGard, Ted has been a manager in the collateral operations and technology divisions of a number of large banks including JP Morgan and Nomura. He also established and led a specialist collateral consultancy practice.
Commentary
Collateral management has traditionally been seen as a back-office activity separated from the trading area, where the focus was on risk management and control. Changes in the market infrastructure mean that revenue generation/cost reduction is becoming more important. As a result, choosing the right collateral to pledge at any point in time – based on the relative costs and eligibility schedules – is an important economic decision that is now being made in the front office. The prevailing strategies are to make the most optimal use of the assets available and to be able to apply consistent standards around the process of collateralization as a means to reduce operational risk.
The move to central clearing of OTC derivatives creates further opportunities for consolidating collateral activity. While some of the regulatory requirements are still unclear at this stage, firms are leveraging their infrastructure around listed products to provide a similar service for centrally cleared OTC products. Being able to provide a consolidated view of collateral requirements across silos and to offer ancillary services such as collateral transformation and optimization becomes a key competitive advantage.