The global financial industry will need to find almost US$100 billion in additional collateral to support the demands of the increasingly sophisticated collateral management ecosystem that has emerged in the wake of EMIR and Dodd-Frank, according to a new paper by Capco, the global management and technology consultancy.

An estimated $97 billion in previously untapped assets will be required to meet current and emerging collateral requirements, including the adoption of two-way initial margin (IM) capabilities – which alone accounts for $60 billion of the shortfall – along with enhanced capabilities to meet the need for IM for cleared trades, pre-funded variation margin, segregation requirements, default fund contributions and tighter collateral eligibility.

James Arnett, Partner at Capco, said: "We have already seen a big spike in collateral requirements in recent years, forcing firms to seek out new sources of high-quality liquid assets within their inventories and via external channels.

"A range of factors means that the supply of eligible collateral is continuing to tighten and as a result borrowing costs are still trending upwards. So while firms still need to focus on efficiencies and optimisation, they will also need to tap previously neglected or unrecognised pools of collateral."

How do I enable cookies in my browser?

Internet Explorer
1. Click the Tools button (or press ALT and T on the keyboard), and then click Internet Options.
2. Click the Privacy tab
3. Move the slider away from 'Block all cookies' to a setting you're comfortable with.

Firefox
1. At the top of the Firefox window, click on the Tools menu and select Options...
2. Select the Privacy panel.
3. Set Firefox will: to Use custom settings for history.
4. Make sure Accept cookies from sites is selected.

Safari Browser
1. Click Safari icon in Menu Bar
2. Click Preferences (gear icon)
3. Click Security icon
4. Accept cookies: select Radio button "only from sites I visit"

Chrome
1. Click the menu icon to the right of the address bar (looks like 3 lines)
2. Click Settings
3. Click the "Show advanced settings" tab at the bottom
4. Click the "Content settings..." button in the Privacy section
5. At the top under Cookies make sure it is set to "Allow local data to be set (recommended)"

Opera
1. Click the red O button in the upper left hand corner
2. Select Settings -> Preferences
3. Select the Advanced Tab
4. Select Cookies in the list on the left side
5. Set it to "Accept cookies" or "Accept cookies only from the sites I visit"
6. Click OK

The global financial industry will need to find almost US$100 billion in additional collateral to support the demands of the increasingly sophisticated collateral management ecosystem that has emerged in the wake of EMIR and Dodd-Frank, according to a new paper by Capco, the global management and technology consultancy.

An estimated $97 billion in previously untapped assets will be required to meet current and emerging collateral requirements, including the adoption of two-way initial margin (IM) capabilities – which alone accounts for $60 billion of the shortfall – along with enhanced capabilities to meet the need for IM for cleared trades, pre-funded variation margin, segregation requirements, default fund contributions and tighter collateral eligibility.

James Arnett, Partner at Capco, said: "We have already seen a big spike in collateral requirements in recent years, forcing firms to seek out new sources of high-quality liquid assets within their inventories and via external channels.

"A range of factors means that the supply of eligible collateral is continuing to tighten and as a result borrowing costs are still trending upwards. So while firms still need to focus on efficiencies and optimisation, they will also need to tap previously neglected or unrecognised pools of collateral."