Latest Capabilities May Enable Asset Owners and Asset Managers to Reduce Cost, Mitigate Risk and Actively Manage Liquidity
Northern Trust Launches Enhanced Collateral Optimization Solution
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Northern Trust (Nasdaq: NTRS) has developed an enhanced collateral optimization solution designed to help institutional investors manage their collateral more efficiently whilst meeting the demands of continuing global regulatory reform.
“Our clients want to be strategic and nimble in managing their investment portfolios, especially with regard to collateral management – deploying the right assets at the correct time to meet regulatory requirements whilst minimizing any impact on investment performance,” said Pete Cherecwich, president of Corporate & Institutional Services at Northern Trust. “Historically the collateral management process took time, resource and frankly a lot of spreadsheets. Today our advanced algorithmic optimization solutions can achieve this objective – minimizing the value of assets that need to be tied up as collateral and reducing counterparty exposure.”
Northern Trust’s collateral optimization capability applies flexible algorithms to manage asset selection when meeting margin requirements. The use of these algorithms could reduce the market value of assets being delivered or prevent assets from being tied up as collateral if they can be deployed better elsewhere. There are a number of different drivers that can be customized to the priorities of each client from a liquidity management perspective.
“The ability to optimize the deployment of collateral is key to reducing our clients’ counterparty risk by utilizing the most efficient assets,” said Gavin Platman, head of operations strategy at Insight Investment. “Insight Investment and Northern Trust have worked together and have devised a solution that we believe addresses our clients’ needs today and provides flexibility for the future as liquidity and collateral management needs evolve.”
In addition to its new collateral optimization capability, Northern Trust recently became the first global custodian to offer access to buy-side, sponsored repo clearing via LCH RepoClear. This capability helps clients minimize risk whilst improving profitability, enabling them to access a diverse range of lenders in a more efficient manner.
Northern Trust can now also support clients trading triparty repo via Euroclear’s triparty service. This provides diversification of repo counterparties as the industry moves away from traditional banking counterparties.
About Northern Trust
Northern Trust Corporation (Nasdaq: NTRS) is a leading provider of wealth management, asset servicing, asset management and banking to corporations, institutions, affluent families and individuals. Founded in Chicago in 1889, Northern Trust has offices in the United States in 19 states and Washington, D.C., and 23 international locations in Canada, Europe, the Middle East and the Asia-Pacific region. As of March 31, 2018, Northern Trust had assets under custody/administration of US$10.8 trillion, and assets under management of US$1.2 trillion. For more than 125 years, Northern Trust has earned distinction as an industry leader for exceptional service, financial expertise, integrity and innovation. Visit northerntrust.com or follow us on Twitter @NorthernTrust.
Northern Trust Corporation, Head Office: 50 South La Salle Street, Chicago, Illinois 60603 U.S.A., incorporated with limited liability in the U.S. Global legal and regulatory information can be found at https://www.northerntrust.com/disclosures.
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