Insight into collateral management and its increasing relevance in modern banking In the wake of recent financial crises, firms of all sizes have adjusted their policies to incorporate more frequent instances of collateral management. Collateral Management: A Guide to Mitigating Counterparty Risk explains the connection between the need for collateral management in order to alleviate counterparty risk and the actions that firms must take to achieve it. Targeted at middle and back office managers seeking a hands-on explanation of the specifics of collateral management, this book offers a thorough treatment of the subject and attends to details such as internal record management, daily procedures used in making and receiving collateral calls, and settlement-related issues that affect the movements of cash and securities collateral. An expert in financial topics ranging from trade lifecycle to operational risk, author Michael Simmons offers readers insight into a field that, so far, is struggling to produce enough expertise to meet its high demand. Presents hands-on advice and examples from a bestselling, internationally renowned author who introduces his third book on operations and operations-related activities Explains the relationship between collateral management and preventing institutional defaults, such as the recent Lehman Brothers downfall Since 2008, firms have recognized and embraced the importance of collateral management, but this book will provide practitioners with a deeper understanding and appreciation of its relevance.

Table of Contents:
Foreword xvii Acknowledgements xix About the Author xxi Introduction xxiii Part 1 Introductory Elements Chapter 1 Fundamental Collateral Concepts 3 Chapter 2 The Nature and Characteristics of Collateral Types 7 Part 2 Sale & Repurchase (Repo) Trades and Collateral Chapter 3 Sale & Repurchase (Repo) Trades and Collateral – Introduction to Repo 29 Chapter 4 Sale & Repurchase (Repo) Trades and Collateral – Classic Repo Trades 33 Chapter 5 Sale & Repurchase (Repo) Trades and Collateral – The Repo Trade Lifecycle 79 Introduction 79 Chapter 6 Sale & Repurchase (Repo) Trades and Collateral – Stock-Based Classic Repo Trades 101 Chapter 7 Sale & Repurchase (Repo) Trades and Collateral – Repo Trade Variations 103 Chapter 8 Sale & Repurchase (Repo) Trades and Collateral – The Global Master Repurchase Agreement 121 Part 3 Securities Lending & Borrowing and Collateral Chapter 9 Securities Lending & Borrowing and Collateral – Introduction to SL&B 161 Chapter 10 Securities Lending & Borrowing and Collateral – Principles of SL&B 167 Chapter 11 Securities Lending & Borrowing and Collateral – The SL&B Trade Lifecycle 211 Chapter 12 Securities Lending & Borrowing and Collateral – Accessing the SL&B Marketplace 237 Chapter 13 Securities Lending & Borrowing and Collateral – The Global Master Securities Lending Agreement 253 Part 4a OTC Derivatives and Collateral Chapter 14 OTC Derivatives and Collateral – Transaction Types – Introduction 295 Chapter 15 OTC Derivatives and Collateral – Transaction Types – Generic Structural Aspects 303 Chapter 16 OTC Derivatives and Collateral – Transaction Types – Interest Rate Swaps 311 Chapter 17 OTC Derivatives and Collateral – Transaction Types – Credit Default Swaps 319 Chapter 18 OTC Derivatives and Collateral – Transaction Types – Foreign Exchange Swaps 329 Chapter 19 OTC Derivatives and Collateral – Transaction Types – Cross-Currency Swaps 341 Chapter 20 OTC Derivatives and Collateral – Legal Protection – Introduction 349 Chapter 21 OTC Derivatives and Collateral – Legal Protection – Master Agreement and Schedule 351 Chapter 22 OTC Derivatives and Collateral – Legal Protection – Credit Support Annex 361 Chapter 23 OTC Derivatives and Collateral – Static Data 401 Chapter 24 The OTC Derivative Collateral Lifecycle 413 Chapter 25 OTC Derivatives and Collateral – The Collateral Lifecycle – Pre-Trading – Legal Documentation 415 Chapter 26 OTC Derivatives and Collateral – The Collateral Lifecycle – Pre-Trading – Static Data 419 Chapter 27 OTC Derivatives and Collateral – The Collateral Lifecycle – Trading – Trade Execution 421 Chapter 28 OTC Derivatives and Collateral – The Collateral Lifecycle – Post-Trading – Trade Capture 429 Chapter 29 OTC Derivatives and Collateral – The Collateral Lifecycle – Post-Trading – Trade Confi rmation/Affi rmation 435 Chapter 30 OTC Derivatives and Collateral – The Collateral Lifecycle – Post-Trading – Trade/Portfolio Netting 439 Chapter 31 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Portfolio Reconciliation 447 Chapter 32 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Marking-to-Market 457 Chapter 33 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Exposure Calculation 463 Chapter 34 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Receiving Margin Calls 475 Chapter 35 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Issuing Margin Calls 501 Chapter 36 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Holding Collateral 515 Chapter 37 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Post-Trade Execution Events – Introduction 531 Chapter 38 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Post-Trade Execution Events – Novation 533 Chapter 39 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Post-Trade Execution Events – Unwind 541 Chapter 40 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Post-Trade Execution Events – Offset 547 Chapter 41 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Post-Trade Execution Events – Credit Events 553 Chapter 42 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Collateral Substitution 559 Chapter 43 OTC Derivatives and Collateral – The Collateral Lifecycle – Throughout Lifetime of Trade – Income & Corporate Action Events 567 Chapter 44 OTC Derivatives and Collateral – The Collateral Lifecycle – Trade Termination – Trade Termination 575 Part 4b OTC Derivatives and Collateral – Legal Documentation Chapter 45 OTC Derivatives and Collateral – Legal Documentation 579 Part 4c OTC Derivatives and Collateral – Regulatory Change and the Future Of Collateral Chapter 46 OTC Derivatives and Collateral – Regulatory Change and the Future of Collateral – Introduction 583 Chapter 47 OTC Derivatives and Collateral – Regulatory Change and the Future of Collateral – Centrally Cleared Trades 597 Chapter 48 OTC Derivatives and Collateral – Regulatory Change and the Future of Collateral – Non Centrally Cleared Trades 629 Glossary of Terms 657 Useful Websites 703 Further Reading 705 Index 707