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As the market in Europe prepares for the commencement of mandatory clearing, new clearing structures are being devised by CCPs (central counterparty clearinghouses) to make the process smoother, more cost efficient and, perhaps most pertinently, more collateral efficient for clients.

With increased demands being placed upon collateral, collateral management and optimisation has never been more important. Being able to source the right collateral at the right time is vital.

Management companies are having to face up to post-trade risk in their risk management processes. How easy is this for them?

On Thursday 28 April, Thomas Murray hosted a half-day event in Luxembourg entitled Post-trade risk roundtable: How to effectively identify, monitor and manage post-trade risk. The event sought to explore the regulatory hurdles faced by those involved with the funds industry, and how firms can mitigate risks in their post-trade networks.

The way that collateral is being used, and indeed needed, in financial markets has altered significantly since the financial crises. With the central role handed to CCPs in markets, the majority of trades now need to be collateralised in one way or another.

One of the main stated aims of T2S (TARGET2Securities) was to reduce settlement costs across Europe. This is something that has, so far, not been achieved as the volumes simply do not exist on the system to achieve a reduction in the cost of settlement through T2S. The ECB is in full cost recovery mode at the moment, so economies of scale are vital – the more that goes into T2S, the more that will be gained from it.

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