The roadmap of change for collateral management
How banks, brokers and CSDs manage collateral is undergoing a once in a generation change. For market players looking at how they best prepare for this, it is important to analyse the process in which change occurs. In the world of collateral management, the revolution caused by new regulation is happening at the same time as the financial technology underpinning the sector is rapidly evolving. But that is not enough. Existing market players need to be willing adopters of the new ways of doing business, while outside innovators must also be allowed into the market. The final phase occurs when the market comes together to adopt a new set of standards that enshrines the revolution into a new way of working.
Phase 1 – New regulations
Phase 2 – New technology
Phase 3 – Willing adopters, new competition
“Because banks and service providers are looking to use existing pipes to win business and market share, the process of change will be accretive,” says Wager at Paxos. Other market participants agree that it will be those already in the market who will drive the change process forward. “None of the changes that are coming will happen without the incumbents, and that is not necessarily a bad thing,” says Kevin Cook, CEO of Spring Treasury, a collateral infrastructure solutions provider established in 2016.