Citi has expanded its Citi OpenInvestor suite of investment services to include Segregated Collateral Custody Accounts that help clients better mitigate counterparty risk, provide asset safety and improve collateral efficiency.
This new capability adds to Citi’s existing agency collateral management service, OpenCollateral. Responding to emerging regulatory requirements, the new service helps its clients to support new requirements under Dodd-Frank and European Market Infrastructure Regulation (EMIR) rules.
“The possibility that every OTC relationship may need collateral accounts under new regulations has driven client demand for more efficient solutions,” says Chandresh Iyer, managing director, investor services, Citi. “These services draw upon our deep understanding of relevant business issues to streamline the technical and operational challenges of managing all types of collateral assets across multiple counterparties.”
For tri-party account control arrangements (ACA), Citi will act as an intermediary between the pledgor and the secured party, holding pledged collateral in a segregated custody account. Within the terms of each ACA, Citi’s new solutions allow pledgors to instruct transactions on the collateral account and secured parties to monitor pledged collateral positions in a highly automated manner.
Citi’s suite of new collateral custody solutions also offers clients features for:
• Automated substitution control - for rapidly changing collateral portfolios, this facility enables automated processing of substitution transactions whilst maintaining collateral values above the agreed initial margin level.
• Collateral monitoring - for complex collateral portfolios, Citi can provide daily collateral monitoring that incorporates full eligibility testing, concentration limits and haircut schedules.
• Margin manager cash reinvestment - for Citi clients with US dollar onshore accounts, Citi offers a programme to reinvest cash collateral into money market funds through a central online portal.