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The evolving role of collateral in international capital markets

Author

Listed:
  • Van De Velde, Jo

Abstract

The financial crisis has led to changes in market behaviour and regulatory focus to control the risks inherent to financial market activities. Both developments are increasing the need for high-grade securities to be used as collateral in order to mitigate risks arising from multiple types of transactions. Tracking, sourcing and transforming collateral from rather fragmented securities inventories, often spread across a number of depositories, agents and geographic locations, is a challenging task for even the biggest firms. The definitive way forward is still unclear, but a number of options exist to help alleviate the burden associated with building and maintaining efficient collateral management practices. This paper assesses in more detail the impact on collateral from a number of the regulatory changes, as well as the way in which they are expected to accentuate the problem of collateral scarcity and fragmentation. The author also scrutinises a cross-section of the proposals available to manage collateral in this new environment.

Suggested Citation

  • Van De Velde, Jo, 2013. "The evolving role of collateral in international capital markets," Journal of Securities Operations & Custody, Henry Stewart Publications, vol. 5(3), pages 218-231, January.
    • Handle: RePEc:aza:jsoc00:y:2013:v:5:i:3:p:218-231
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    More about this item

    Keywords

    risk management; collateral management; regulation; Euroclear;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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