Collateral Management Technology, Vendors and Emerging Trends

Finadium Research Report

Collateral Management Technology, Vendors and Emerging Trends

Finadium
April 2010

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The collateral management technology industry is at the early end of a boom in product usage. The credit crisis of 2008 showed unequivocally that collateral management entails real risks, and firms that fail to manage those risks appropriately can fail suddenly. Nowhere was this lesson felt most harshly than at Bear Stearns and Lehman Brothers. Today there remains over US$600 trillion in OTC and listed derivative trades outstanding, all of which requires active collateral management.

While large banks and some large asset managers have had installed technology for years, today hedge funds and pension plans are arriving at the conclusion that collateral management is too complex to manage without technology. The central clearing of derivatives expands the potential market by inviting new counterparties to participate. Collateral management technology is also seen as important for financial services firms that use outsourced margin solutions.

This report analyzes the business opportunity and selection criteria for collateral management technology vendors. It provides a review of seven leading vendors today, as well as their management’s perspective on the evolution of the collateral management technology space. Our findings are driven by conversations with a variety of market participants, including asset managers, software vendors, integration consultants and large banks. We attempt to put some shape around a topic that has gotten substantial attention over the last year and a half but that can remain difficult to define, even at the largest financial institutions.

The following vendors of collateral management technology are profiled in this report:

• AcadiaSoft
• Algorithmics
• Financial Software Systems
• Lombard Risk
• Omgeo
• Rockall Technologies
• SunGard

This report is 24 pages with 5 exhibits.

TABLE OF CONTENTS
■ Executive Summary

■ The Current State

■ Common Functionalities of Collateral Management Systems

■ Profiles of Leading Technology Vendors

■ Dynamics of Revenue Growth for Collateral Management
Technology Vendors

■ Future Market Directions
– Parallel Play and Industry Associations

■ About the Author

■ About Finadium