Collateral management and optimisation product of the year

VERMEG continues to evolve its functionally rich collateral platform COLLINE through partnerships with its global client base, which includes some of the world’s leading banks.

COLLINE automates the collateral management process, starting with margin calculations, where it captures trades, loads data, aggregates variation and/or initial margin (IM), applies thresholds or rounding as appropriate, aggregates collateral positions and calculates requirements using margin methodologies such as standard initial margin model (SIMM), grid or margin finance, if applicable. It issues or responds to margin calls, using MarginSphere’s messaging where possible, achieving high straight-through processing (STP) rates, as well as reconciling portfolios and automatically tracking disputes.

For optimisation and inventory management, COLLINE provides a wide variety of options and the use of various algorithms to maximise or minimise the cost of collateral. It consolidates firm-wide inventory and calculates the optimal asset allocation, and automatically books collateral and manages segregation obligations via pre-set rules.

Messaging and settlements workflow initiate collateral transactions, facilitates ledger bookings and tracks collateral settlements, all of which are Swift-enabled. The reporting engine updates system records and automatically deliver reports downstream.

COLLINE is fully compliant with key regulations, such as Dodd-Frank, the European Market Infrastructure Regulation and uncleared margin rules (UMR). Connectivity is key in collateral management and links are provided to tri-parties, central counterparties, in-house infrastructure, MarginSphere and Swift.

Clients range from small local institutions with a handful of collateral agreements to major global banks with over 160,000 legal documents across multiple asset classes. COLLINE has a single code base that is the same for every client, and a modular architecture that allows elements to be deployed separately, for example, optimisation or individual asset classes.

COLLINE is available installed or hosted on-premise, as well as via single- or multi-tenant Amazon Web Services cloud. A new user interface reduces the number of screens in the reporting modules and makes dashboards more intuitive, improving access to information.

A new Simm service allows the setup of an end-to-end operational framework to monitor the $50 million US regulatory IM threshold. It includes agreements setup, threshold per groups and funds, calculation of the SIMM or schedule-based IM, and automatic alerts of any internal threshold breach.

To support firms exchanging IM under UMR regimes using a third-party custodian service, MT54X series Swift messages to deliver or receive securities, and MT2XX series for cash collateral have been added to COLLINE. This enables clients to follow settlement of instructions and custody and segregated accounts holding in real time. This is being extended to cash and securities reconciliation through support for MT53X and MT9XX series messages.

Judges said:

• “VERMEG provides a comprehensive cross-asset collateral calculation and management service using industry standards and is interoperable with other critical infrastructure.”
• “Good end-to-end coverage and STP. Recent releases offer improved connectivity and greater optimisation capability.”

Helen Nicol, Product Director, VERMEG, says:

“VERMEG’s collateral management platform COLLINE is the established market leader for managing, automating and optimising the end-to-end collateral process. By enabling firms to intelligently automate to improve efficiency and reduce operational risk, and to optimise, it gives clients a competitive edge to make money in challenging market conditions. COLLINE’s flexibility empowers clients to tailor the platform around their target operating model, both functionally and operationally. A variety of on-premise or cloud hosting options is available, all while remaining robust and regulatory compliant.

It is also now available as a lightweight software-as-a-solution called COLLINE.Cloud for those looking to take control of UMR.”