Target Operating Model Definition for Collateral Management
The collateral management industry is one which is rapidly developing due to changes in both industry best practice and the regulatory environment. A particular example of this, which is leading to wide-ranging change, is the move to a mixed cleared and OTC execution environment.
In response to this, the ways in which financial institutions organise their collateral management functions and define their collateral management processes are also undergoing significant change. Alongside these industry developments, collateral management technology capabilities also continue to evolve year on year. Such technology change typically also facilitates or requires changes to business processes and/or organisational structures.
Initial design of both business processes and related organisational structures is undertaken through our Collateral Management Target Operating Model (TOM) definition. This addresses areas such as:
- Overall organisation of the collateral management function e.g. overall product mandate
- Roles and responsibilities between sub-functions within collateral management e.g. splits across product responsibilities (OTC, repo, securities finance etc) and/or across process functions (margin management, reconciliations, new business etc)
- Appropriate centralisation or de-centralisation of collateral management functions across entities and product classes
- Split of collateral management responsibilities between operation teams, risk teams and front office teams (e.g. front office inventory management, collateral trading, CVA teams etc)
- Definition of the end to end collateral management business processes
To support the Target Operating Model process, we utilise the Risk Map tool.
For more details on our wider approach to managing business change, see our overall organisational change and business re-engineering page.
The Collateral Management Target Operating Model definition can either be taken as a discrete piece of work or as the first step in a wider programme of change (see the full InteDelta Delivery Lifecycle for Collateral Management for an overview of how such a programme might be structured).
Even where a client is not yet in a position to engage the wider programme of change, many organisations find it complementary to incorporate an InteDelta Market Intelligence benchmarking exercise alongside the Collateral Management TOM definition in order to ensure alignment of the defined business process and organisational model with its target peer group (see Market Intelligence benchmarking services for further details).
Where collateral management training is required in order to effect the targeted organisational change, we are able to facilitate this (see Training services for further details).