Reforms coming in to effect through regulations such as the European Market Infrastructure Regulation (EMIR) require buy-side firms to better manage and mobilise collateral.
EMIR mandates clearing of OTC derivatives through a central counterparty, and similar initiatives are underway in Asia.
The new capability from HSBC will provide an independent and automated collateral management service including calculation and verification of margins and interest, and automated margin payments.
Collateral movements will be processed on a straight-through basis using standard SWIFT links with custodians.
The HSBC client portal can also provide underlying trade and collateral position information, as well as reporting services.
Craig Cowe, head of collateral management product and securities services at HSBC, commented: “Incoming regulations to centrally clear OTC derivatives mean that it’s crucial for investment managers to know where their assets are and what they can be used for.”
“We’ve put in place collateral processing hubs in Europe and Asia and have invested significantly in our capability to ensure our clients can keep pace with global regulatory change.”
John Van Verre, HSBC global head of custody and treasury, added: “In the past, collateral management has been viewed by many institutional investors as a back office activity.”
“These new regulatory requirements mean that the process is becoming more firmly integrated with the front office, which requires much more proactive management of positions than historically was the case.”