Northern Trust Kicks off Collateral Mgt. Services Suite

January 31, 2007 ( - Northern Trust on Wednesday unveiled a suite of automated collateral management services in the UK, which it said will help investors manage their credit risk from using over-the-counter (OTC) derivatives.

A Northern Trust news release said it has contracted for collateral management outsourcing with Lombard Risk, a provider of risk management, regulatory and valuation software, to provide automated collateral management capabilities through its Colline application.

Features of the service that Northern Trust now provides for OTC derivative trades under International Swaps and Derivatives Association (ISDA) Master Agreements include:

  • Independent OTC valuation services.
  • Making collateral calls and responding to collateral demands according to the terms of the credit support documents.
  • Reporting valuations and collateral activity to clients.
  • Performing trade reconciliations with counterparties.
  • Collateral safekeeping and clearing; and
  • Cash management through Northern Trust Global Investments.

“We have seen a rise in the use of OTC derivatives amongst our client base and increasing interest from pension funds in particular in outsourcing their collateral management activities,” said Stephen Andress, global head of derivatives operations at Northern Trust, in the news release. “This trend continues to gather momentum in Europe, and the USA and Asia are set to follow.”