Recent conversations with four collateral management professionals suggest that Lombard Risk is on the upswing but Algorithmics’s version 5 of their collateral management solution is on the downturn. Even so, while Lombard has put an extra focus lately on the development of their various reporting tools, not all are up to snuff. Notably, the OTC derivatives module sounds robust but maybe not the repo module. What are collateral managers to do?
This might sound like trivial stuff but the market for collateral management technology is big business, especially since collateral must be managed closely and reported on in great detail under new regulatory regimes. Technology firms with the right solutions stand to capture the biggest tier 1 banks and several tier 2 players. Nearly all asset managers that currently trade derivatives will also need to purchase technology, use an ASP solution or move to an outsourced solution that manages both operations and technology.
In an April 2010 report, Finadium found seven collateral management vendors worth discussing. Today we would reduce this list to five, with one other moving more firmly into an industry-wide messaging utility. Recent press releases show that every vendor is earning new client wins. At the time, Algorithmics was clearly the well entrenched incumbent. However, Lombard’s recent win of SocGen and general market commentary suggest it is on the upswing. Time to buy Lombard stock?