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Collateral Management

Expanding Eligible Collateral

Accessing Collateral
When Needed

Tokenovate’s platform broadens the scope of eligible collateral by tokenising assets and automating their swift transfer between custodians, boosting capital efficiency and reducing operational risks.

 

Traditionally, collateral management in derivatives markets is often slow and inefficient, relying on manual processes that delay the movement of collateral. These inefficiencies can lead to increased counterparty risk and curb market liquidity, while prescriptive regulatory requirements add further complexity to collateral eligibility assessments.

 

Higher interest rates and increased volatility leads to more frequent re-posting of collateral assets, resulting in increased cross-entity asset movement. This complicates the optimisation of collateral pools and exacerbates the drag on unfunded assets. Additionally, new regulations such as Basel III, along with the transition to T+1 settlement, are intensifying industry pressures.

Accessing Collateral When Needed

Tokenovate’s platform enables real-time transfer and settlement of eligible collateral, significantly accelerating the process. This enhances liquidity in derivatives markets and reduces counterparty risk by ensuring that collateral is on hand precisely when required.

Benefits

Automation can cut processing time for margin calls and settlement transfers from minutes to seconds.

For a bank handling 1000 margin calls per day, this translates to saving approximately 170 hours daily. Assuming an average labour cost of USD 50 per hour, this results in annual savings of exceeding USD 2.1 million. During periods of high volatility, these benefits would likely be even higher as the volume of margin calls increases.

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