Triparty Collateral Management

Triparty Collateral Management

Real-Time Exposure Coverage and Collateral Substitution

Comprehensive Triparty Collateral Management Solution

Collateral management is supposed to be a routine middle office task. Since the financial crisis, however, it has come to be viewed as a key tool to mitigate counterparty, credit and operational risk. Though collateralization can be a challenge to manage.

The Triparty Collateral Management (TCM) service of SIX is an attractive option for firms that prefer to stick to their core competencies. That said, new regulations require more transparency and reporting on collateral management activities. To enable transparency, standardization and automation are critical. And as the day-to-day management of collateralization activities can be quite demanding, many firms – banks, insurance companies, pension funds – choose to take advantage of the triparty collateral management service. 

Delegate Your Day-To-Day Operational Responsibilities to SIX

By choosing this route, the two parties to a transaction can effectively delegate their day-to-day operational responsibilities around collateralization to SIX – this is where SIX’ Triparty Collateral Management solutions come into play. SIX performs tasks such as the selection and automatic execution of collateral transfers and ongoing validation that exposures are being appropriately collateralized through daily mark-to-market checks on the collateral throughout the lifecycle of the transaction.

How Triparty Collateral Management Works

Exposure Coverage - Irrelevant of Its Origin

SIX can collateralize various types of underlying principal agreements which the parties may have entered - these underlying transactions are stand-alone transactions which are carried out by the parties independently of SIX. For example, the service can be used to cover an exposure resulting from a bilateral or OTC trade or where exposures originate out of cash loans or securities lending transactions, regardless of where the transaction was concluded. SIX’ TCM standard solution covers them in a highly efficient manner according to the individual needs of collateral provider and collateral taker.

Our range of services is complemented with dedicated TCM solutions covering your collateral needs in connection with Clearing Brokers, Structured Products and Regulatory Initial Margin.

Key Benefits

Lifecycle of a TCM Transaction: From Matching to Settlement

Cycle of Triparty Collateral Management through a Triparty Agent

The parties to the triparty transaction agree the terms and conditions of the transaction outside the triparty environment, both sides mandate and instruct the TPA to process, collateralise and service their transaction within the triparty’s system during the transaction lifecycle.

TCM Solutions

Any Questions? We Are Happy to Help.