With the UMR phase 6 go-live coming up this week, SIX Swiss Exchange has introduced a new Triparty Collateral Management (TCM) solution. When using the TCM service, two parties to a transaction delegate their day-to-day operational responsibilities around collateralization to SIX. This helps ensure the correct amount of margin is being posted and that risks are managed should volatility enter into the market and skew margin for posting.
Christian Geiger, head Sales Repo and Collateral Management at SIX, said in a statement: “Triparty collateral arrangements are especially important for the Uncleared Margin Rules (UMR). SIX has seen an increasing client demand with the final phase of UMR coming into force this September. In order to support our clients, SIX offers Initial Margin Triparty Collateral Management (IM TCM) as a fully integrated service in its innovative web-based Collateral Cockpit. Several clients are already using our user-friendly service that also offers a direct link to the major Margin Calculation Agents and Margin Transfer Utilities, allowing them to leverage existing connections. The service is backed by an ISDA-reviewed custodian documentation.”
The SIX triparty agent (TPA) performs tasks such as the selection and automatic execution of collateral transfers and ongoing validation that exposures are being appropriately collateralized through multiple daily mark-to-market checks on the collateral throughout the lifecycle of the transaction. This new service creates further tangible opportunities for clients and helps them to reduce operational risks and costs.
Nerin Demir, head Repo & Collateral Management at SIX, said in a statement: “With this solution combined with our sophisticated Collateral Cockpit we provide a higher level of security, control and usability for our clients. In addition we established the backbone for collateral mobilization, enabling many new use cases for our collateral management service and a foundation for future growth.”
The new TPA based TCM solution adds new features and opens up new possibilities. The main advantages for our clients of this new solution are as follows:
- The use of the Collateral Cockpit in combination with TCM allows the monitoring of exposures and margin calls in real-time and simplifies processes in Collateral Management such as substitutions.
- All functionalities required to open, manage and close collateral exposures can be controlled in the Collateral Cockpit. This brings TCM to a new level of user-friendliness and makes collateral management as easy as using a smartphone.
- A direct link to the major Margin Calculation Agents and Margin Transfer Utilities and ISDA reviewed custodian documentation.
- Electronic collateral schedules provide full transparency and enable easy configuration of complex schedules by the contracting parties, involving their collateral managers and risk departments in the Collateral Cockpit.
- Collateral takers which are not clients of SIX custody services can also get access to the Collateral Cockpit.