To financial institutions, especially within treasury departments, collateral is the hot topic of the moment. Once, a laborious portion of back-office operations, it is now a fundamental element of the trading cycle. Operations teams are tearing their hair out over ways to efficiently manage this process. But what about corporate treasuries? Sure, you trade derivatives, but do the same rules for collateral apply?

EMIR has kindly branded non-financial-counterparties (NFC) with either a + or a – according to whether or not their trading activity passes a certain level. Only the largest of corporates breach the threshold, making the majority of the market NFC-.

If you are one of the corporate mammoths listed NFC+, you have no doubt familiarised yourself with what is required by next March (if not, we need to talk). You have a large back office department dedicated to risk management practices, looking to technology solutions to effectively manage this change. What I keep hearing time and time again from the NFC- community is: ‘We are too small to worry about collateral’. Like a game of Limbo, many treasurers have danced their way under EMIR’s clearing stick, many thinking they had slipped the grasp and escaped to a collateral free world on the other side.

Well, we are here to tell you, you are wrong. Collateral is breathing down your neck. To loosely quote Benjamin Franklin in saying that like death and taxes, collateral is unavoidable. Future speculation suggests that EMIR will sting NFC’s with the same regulations it has on financial counterparties, progressively moving closer toward a centrally cleared Utopia. As so, you should no longer view collateral through scathing eyes and it is important for all treasurers to understand the importance and value of robust and automated collateral management process.

Posting collateral is not going to add an extra hour to your day or send stress levels soaring. Quite the opposite in fact. Leveraging the benefits can reduce the costs, risks and worry involved with trading derivatives. Collateral offers a safety net, allowing you a better night’s sleep at night (medical approval still pending).

Navigating the collateral minefield can be a tricky task, but luckily for you, CloudMargin are here to help. Made for corporates large and small, our platform can make managing collateral as simple as clicking a few buttons; allowing an end to spreadsheets and emails. If you loathe spreadsheets as much as the next person and you’re keen to hear more – drop us a message. We would love to have a chat with you.



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