Collateral Will Be King

摘要

Market turmoil placed a spotlight on counterparty risk, and collateral management is critical to mitigating counterparty credit exposure. Solutions that help value and manage collateral on a near-real-time basis will be one of the few areas of IT investment in 2009. Why It's Important: "The importance of the collateral management function in managing counterparty credit exposure is now more obvious than it was a year ago," says Celent analyst Isabel Schauerte. "Growth in collateral agreements reflects increased reliance on this function - especially when the growth in the derivatives market has brought new counterparties with questionable credentials to the market. And the credit crisis has brought the issue of counterparty credit risk into sharp focus." Where the Industry Is Now: Where collateral management was once a staid, boring world of simply holding on to collateral until a contract comes to its natural fruition, the credit crisis, the collapses of Bear Stearns and Lehman, and the volatile markets have injected a large dose of excitement - if not downright fear and panic - into the former drudgery of collateral management. To automate collateral programs, Excel spreadsheets or tactical databases have been sufficient at smaller firms; larger, more mature participants in the market have developed custom in-house collateral systems.