Fintech Insights

Optimize global securities finance and collateral assets

Ted Allen | director of business development, Securities Finance and Collateral, FIS

October 14, 2021

Is Your Inventory Earning Enough?

With so many firms unable to view and optimize their global inventory across treasury, securities finance and cross-product collateral management, both buy- and sell-side firms are searching for new ways to lower the cost of collateral and liquidity while improving returns from securities lending. The problem can be summarized as follows:

  • Position and trading data is held across multiple siloes of systems and geographies without a single point of consolidation.
  • Trade and settlement information is not updated in real-time.
  • There is no central, consolidated inventory view.

Consequently, decision-makers regularly miss out on revenue-generating opportunities. Indeed, they tend to increase buffers without knowing exactly where assets stand in real time to reduce intraday settlement liquidity risk, often leaving money on the table.

The Right Tool for Optimizing Global Inventories

In response, FIS has developed its Global Inventory and Optimization Platform, an API-based, cloud-native solution that increases noncash collateral use in support of cash and collateral management. The solution provides three building blocks for a globalized view of inventory:

  • Real-time connectivity with position trading and management systems
  • Real-time connectivity with custodians for up-to-date settlement information
  • Position data aggregation and analytics

This consolidation enables you to locate assets in your firm quickly, determine what’s available for optimization and decide best use with the help of a powerful allocation engine. You set the rules for optimization based on your firm’s particular requirements. The platform’s framework allows you to define fixed and variable costs, asset sources and specific uses, and then create models that help you achieve your firm’s individual goals.

For instance, you can capture eligibility schedules, concentration limits, settlement timing and even counterparty preferences to manage relationships within your own risk tolerance. You can then test these inputs through a decision analysis algorithm to identify the ideal timing of specific asset allocations to achieve your optimum end state. Basic, predefined scenarios include:

  • Minimize cost of collateral
  • Maximize funding capacity
  • Maximize returns from securities lending

You can use the platform to maximize returns from securities lending, minimize the cost of collateral and reduce your balance sheet cost of securities allocated across business lines.

Get Up and Running Fast

There is no need to wait on global inventory transparency and optimization. Global Inventory and Optimization Platform deploys rapidly over your existing underlying systems, serving as a lightweight consolidation layer that eliminates siloed environments. As a result, the road from where you are today to true global inventory and optimization is paved with proven technology supported by the leader in securities finance and collateral fintech.

To learn more or schedule a private demonstration, please contact FIS today.