Frances Maguire
Frances Maguire

Reducing the risks: new perspectives on FX margin and collateral management

FX margin trading and the subsequent need to manage collateral has become very much in the spotlight in recent times as the cost of credit becomes more prohibitive and firms seek to squeeze greater efficiency from their bottom line.

First Published: e-Forex Magazine 36 / FOCUS / July, 2009

The current turbulent trading environment has meant that more effective risk management has become a top priority for many banks and FX brokers, and placed collateral management at the top of the agenda. For banks and brokers managing collateral and margin activities in today's volatile FX trading environment, the challenges are greater, but the benefits to be reaped in getting it right, are also much greater.Mike Thrower, head of sales and marketing at Cognotec, says that what is happening within collateral management today is, to some extent, being driven by what is going on outside credit risk and collateral management, and in the structure of the industry. He adds: “The market for FX brokers is consolidating quite significantly, primarily as a result of regulatory changes in Switzerland and the US. There is a smaller number of larger players, with an increased focus of risk management and controls, and on scaling the business.”The need for better control systems has caused a large amount...continued

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