July 2016

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This report presents the findings of Finadium’s ninth annual asset manager survey on collateral management in securities finance. The report is based on interviews with 30 asset management firms in North America and Europe investing a combined US$19.9 trillion in assets. Managers discussed their thinking on cash collateral management policies, separately managed accounts vs. money funds for cash investments, repo scarcity and equities as collateral. The survey results are both a peer review and a forward-looking analysis offering insights into changing client behavior and market conditions.

Collateral management in securities finance remains a robust practice and asset managers appear to be taking all the right steps to appropriately manage their risk exposure. The markets are changing however, and managers should consider the knowns and unknowns in their future planning. Ideally, that planning would include what-if scenarios such as a lack of repo reinvestment options, or what the impact of collateral requirements for non-cleared derivatives might mean in securities finance. One or more of these scenarios is likely to occur in the near future.

This report should be read by asset managers, agent lenders, custodians, repo dealers and other service providers to assist with planning for the future of asset managers’ securities finance activities.

This report is part of the Finadium Executive Briefing series, providing briefings and analysis to the financial markets industry.

This report is 19 pages with 9 exhibits.

■ Executive Summary

■ Collateral Management in Context
– Methodology

■ Collateral Investment and Acceptance Policies
– Cash Collateral Policies
– SMAs vs. Money Funds for Cash Investments
– Repo Scarcity
– Equities as Collateral

■ Safe in the Silo, for Now

■ About the Author

■ About Finadium


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