Gresham Computing, a provider of transaction control solutions to international financial institutions and corporates, says that insurance broker Willis has selected its Clareti Transaction Control (CTC) solution for real-time matching and reconciliation of transaction data across its global business.
ISS Magazine discusses collateral management with Alliance Bernstein's Chief Investment Officer, Erik Vynckier
ISS: There is a finite supply of safe assets that can be used as collateral and that pool is dwindling. What are the implications of this phenomenon in the short to medium term?
EV: The relevant question is not whether there are enough suitable assets globally to serve as initial and variation margin at clearing houses, but whether the potential collateral is held at the right place in the right legal entity.
For insurers who hedge liabilities or guarantees given to policyholders having to post sovereigns as initial margin and cash as variation margin forces them to hold sovereign bonds and maintain very liquid bonds which can be cashed in at low transaction or repo costs. As a consequence, portfolio returns are depressed compared to the favoured asset allocation: corporate credit and illiquid high-margin lending.