Market participants are demanding proven operational platforms for the end-to-end management of complex assets in their portfolios. Principia is also helping existing SIV managers, SIV sponsor banks and alternative investment funds in meeting new operational and technical challenges. The recent credit crisis has further highlighted the importance of the efficient management, control and monitoring of structured finance portfolios, both on- and off-balance sheet. Many financial institutions have identified new opportunities to enhance the entire process, at this time of transition in the market. Principia SFP will enable new structured finance managers to monitor cashflows, valuations and amortization events. It also incorporates risk and compliance controls, while providing ongoing surveillance and reporting of all assets end-to-end - from portfolio management through to accounting.
Large-scale ABS and MBS asset redistribution has highlighted the requirement for a strong operational backbone, which has traditionally not been a concern for SIV capital note investors and other portfolio managers. Douglas Long, EVP Business and Product Strategy, Principia stated: âWith assets moving directly onto the balance sheets of banking organizations and alternative investment funds, operations are no longer solely funding driven, so the challenge of attaining transparency of all investments, across multiple business operations is acute. Having developed our solution with SIVs, ABCP conduits, credit derivative product companies and portfolio managers, Principia is in a unique position to deliver packaged solutions for the next wave of structured finance and credit investment managers.â
Vertical slicing activity has put structured finance capital note investors in the position of having to monitor assets in disparate places, both on- and off-balance sheet. Principia SFP provides for a holistic view of assets, liabilities and associated derivatives in multiple locations, enabling more effective and active liquidity management. It also gives the investor the accurate risk profiling and reporting capabilities they require for the processing and accounting of these complex securities.
Long continued: âPrincipia SFP can immediately address the need for increased surveillance and risk management at a time when there is ever more scrutiny over risk and accountancy practices. We are already in talks with more than 20 financial institutions around the world that are now looking for help in this area. We expect the number to continue to rise as more off-balance sheet operations are restructured and the sponsors and investors find themselves managing the ownership of physical assets.â