Developments in collateral management services

In a report published today, the Committee on Payments and Market Infrastructures (CPMI) examines developments in the collateral management services industry and the attendant potential settlement-related benefits and risks.

The report, Developments in collateral management services, describes how collateral management services are changing in an effort to address expected increases in demand for collateral. It provides an overview of the variety of approaches being undertaken by many of the service providers to furnish customers with better tools to monitor their securities holdings and increase efficiencies in the deployment of those securities.

While the report identifies a number of benefits resulting from the ongoing innovations, it also highlights that proposed services have led to increased complexity and operational risks. Both the public and the private sector need to understand, monitor and appropriately manage the associated risks as innovations in collateral management services are introduced.

Notes to editors

The CPMI promotes the safety and efficiency of payment, clearing, settlement and related arrangements, thereby supporting financial stability and the wider economy. The CPMI monitors and analyses developments in these arrangements, both within and across jurisdictions. It also serves as a forum for central bank cooperation in related oversight, policy and operational matters, including the provision of central bank services. The CPMI is a global standard setter in this area. It aims at strengthening regulation, policy and practices regarding such arrangements worldwide. The CPMI secretariat is hosted by the BIS. More information about the CPMI, and all its publications, can be found on the BIS website.

The report, Developments in collateral management services, has been prepared for the CPMI by a working group consisting of representatives of central banks that are CPMI members plus the Central Bank of Luxembourg. The working group was chaired by Marsha Takagi of the Federal Reserve Bank of New York. The working group was commissioned by the CPMI to take stock of the existing range of collateral management services provided. The group was also tasked with studying the ongoing innovations aimed at responding to the increased demands for collateral, and with identifying any increased or new settlement-related risks as a result of such innovations.