Enterprise Collateral Management refers to a centralized system and set of processes for overseeing, optimizing, and managing all forms of collateral held or pledged across an institution’s entire trading and lending activities. This is particularly relevant in institutional crypto finance for mitigating counterparty credit risk and optimizing capital utilization.
Mechanism
This system operates by aggregating collateral data from various business units and asset classes, including digital assets, into a unified view. It monitors collateral values against predefined thresholds, calculates margin calls, and facilitates automated or semi-automated collateral transfers. Key functions include eligibility determination, valuation, and rehypothecation within regulatory guidelines.
Methodology
The methodology employs a holistic risk management framework, integrating real-time valuation, stress testing, and optimization algorithms to ensure efficient collateral allocation. It establishes clear governance policies for collateral usage, risk exposure limits, and compliance with regulatory requirements. This systematic approach aims to reduce operational overhead, lower funding costs, and enhance overall risk control.
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