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Collateral Management Guide PART 11: Checklist for Building a Collateral Management Function

Author: Financial-edu.com


The following checklist is helpful for building a basic collateral management function.

Business Plan:
- Goals
- Costs vs. Savings vs. Risk
- Budgets
- Authority and Buy In from Key Constituents (Trading, Sales, Treasury, Accounting, Risk, Senior Management)
- Management Support and Enforcement

Technology:
- Data feeds
- Data and document storage
- Collateral Software
- Accounting Software
- Risk Management Software
- Outsourcing?

People and Skills:
- Collateral Manager:  Operations, relationship management, regulatory / legal skills
- Credit Manager:  Credit analysis skills
- Valuation Specialist:  Valuation, simulation tools, research, mathematics or financial engineering skills
- Accounting Manager
- Cash Manager
- IT Support:  Database, SWIFT messaging, data feed skills

Legal Agreements: 
- Key Factors:  Correct form, accurate, comprehensive, enforceable
- Collateral Agreements (SEE ISDA, UK, Europe, Asia authorities)
- Credit Support Annex (CSA)
    - New York Law (pledge) = used by 54%
    - English Law (transfer) = used by 22%
    - English Law (deed) = used by < 1%
    - 2003 ISDA Collateral Asset Definitions
    - Other Country Definitions: China, Japan, Dubai, etc.
- Margin Agreement
- Tri-party agreements
- Document management processes and systems

Processes: 
- Daily process / workflow design
- Systems and technologies in place
- Dispute process: identification, escalation, negotiation, resolution, use of 3rd parties
- Process oversight / control:  fully documented, approval processes
- Use of third party providers:  custodians, accountants, valuation, software, regulatory, industry groups

<< BACK TO PART 10

CONTINUED IN PART 12 >>

 
 
 


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