FinIQ launches collateral & margining module for complex product

3 October 2011

FinIQ has launched a Bank-wide Collateral Management module, which provides distinct features catering to the most advanced financial instruments such as FX and equity accumulators and other multi-leg option strategies. The module is comprehensive in its handling of variety of banking and trading exposures including overdraft, loan, IRS, forwards, standby LC, bank guarantee, etc.

Exposures are aggregated from a variety of sources that can be either FinIQ systems or other systems within the bank. Exposure synchronization can be real-time or batch-based. Change in exposure is also reflected by post trade events such as redemptions, unwinding, maturity, barrier touching and corporate actions such as suspension, revocation, split, merger, consolidation. Exposure can be aggregated at individual account level or customer group level.

Collaterals can be auto-uploaded or manually set. They can be of various types such as insurance policy, bonds, structured products, mutual funds, stocks, deposits, guarantees, etc. Haircut and lending ratios can be set at individual customer or customer group or business entity level for each of the collateral types.

Concentration rules can be defined further to cap portfolio concentration of a designated asset class or an individual asset. This is entirely rule-based. Rules can include scenarios such as – ‘maximum loanable amount’ on a particular security for each ‘customer pool’ may not exceed N percent of its issued capital and ‘maximum loanable’ on the same security for all customer may not exceed M percent of outstanding shares.

Limits can be based on either individual exposure or set of disparate exposures. Limits can be refreshed in real-time with latest market rates and thresholds can be defined to generate alerts. Various multipliers, credit conversion factors, leverage factors and other such rule based parameters are used to drive the limit calculations.

Apart from online monitoring, the system also generates alerts and reports for limit excess, collateral short-fall, margin summary, etc. All master maintenance, collateral & exposure input screens have maker-checker functionality and audit trail reports.

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