Collateral Management

CHAPTER 23OTC Derivatives and Collateral – Static Data

This chapter describes what static data¹ is, how it is used for OTC derivative collateral, the benefits gained by its use and the protective measures needed to ensure such valuable data is not corrupted, moved or lost. Additionally, the way that software systems are used for collateral management purposes is described.

23.1 INTRODUCTION

Generically speaking, the use of static data (also known as reference data) is a significant factor in enabling a firm to process trades of all types in a highly efficient manner, and to achieve Straight Through Processing (STP).

Static data is an internal store of information that remains constant or changes infrequently; it facilitates automated and repeated use of essential information which must be added to the basic details of an individual trade.

If static data is present within the relevant systems of a firm, it enables immediate capture of an individual trade’s details and subsequent enrichment of additional (but essential) information.

Different categories of static data are necessary, including:

• trading entities within the firm
• counterparties of the firm
• currencies
• derivative products, and
• securities (in a variety of roles, including when used as collateral)

and in each case, the necessary static data is explored within this chapter.

Such data can be held entirely manually (i.e. in handwritten form), or within a software system repository; how such information is held ...