Broadridge Collateral Management the New Collateral Operating Environment

Broadridge Collateral Management The new collateral operating environment

Banks and other financial firms are facing compliance with a high volume of new regulations over the coming years, from Basel Ill, to Dodd Frank in the US and EMIR in Europe.

These new rules are driving a sea change in collateral management by forcing firms to better manage counterparty credit risk, centrally clear derivatives and improve collateral processes and reporting.

The above factors create an increasing demand for high quality collateral, in contrast to a potentially decreasing and more siloed supply.

In the new environment, firms must now increase automation to manage more complex margining processes, while making the most efficient use of scarce collateral assets in order to maintain profitability and bottom line earnings.

The new model that has evolved over the past few years sees our customers using the Broadridge system to centralize inventory and exposures into a collateral hub.

This allows them to keep a tight control of exposure and collateral usage costs on an enterprise wide basis across all business lines. From there, customers can optimize the use of collateral inventory across a number of different trading opportunities to reduce costs and generate a greater return on economic capital.

2 Integrated Enterprise Wide Collateral Management The Broadridge Collateral Management system provides an enterprise-wide, cross-product collateral management solution for securities lending, repo, and bilateral/cleared OTC/exchange-traded derivatives collateral.

The solution offers the ability to view exposures in real time across business lines, providing a centralized view of collateral needs versus collateral availability.

It also provides tools to automate manual processes, mitigate operational risk more effectively and respond more easily to regulatory change, while making the optimum use of balance sheet and retaining vital liquidity. Central Clearing

EMIR

DODD Frank Act

Process Improvement

Collateral IOSCO Optimization Non-Cleared Derivatives Margining Basel III

3 BROADRIDGE COLLATERAL MANAGEMENT SOLUTION

1. Interface 2. Reference 3. Agreements 4. Calculate 5. Manage 6. Optimize and Book Data Exposures Inventory Complete market Manage legal agreements Exposure Management Centralized Inventory Cheapest to Deliver Collateral Optimization and reference data i.e. GMSLA, GMRA, OTC, across multiple business Management Collateral Costs uptake and workflow CSA, OTC cleared, lines i.e. SBL, Repo, Cash and Non-Cash Allocation Algorithms futures cleared Triparty, Bilateral OTC, Ladders Cleared OTC Pledges/receipts Map collateral schedules Inventory linked to i.e. eligibility, haircuts, Aggregation and eligibility, haircuts, and Generate SWIFT messages concentration breakdown of cleared IM, concentration rulesets Client Brokers Maintain independent VM, PAI, Fees, Interest, Coupons Basel III LCR eligibility Input and Validation Optimization amounts, MTAs and and levels thresholds Rules and Workflow

Positions SWIFT Cash MQ Email Manage Margin Positions & Data Feeds Margining FTP Agreements Requirements Inventory XML CSV

Bilateral Triparty Real Time Real Time Collateral Confirmations Margin Agents Client House Calls Collateral Collateral CCP Availability Availability Clearing Broker/FCM Margin Requirements

4 7. Settle and 8. Substitute and 9. Corporate 10. Interest 11. Interactive Reporting Unsettle Re-Optimize Actions SWIFT Module Eligibility based Full service corporate Interest Statement Settlement Tracking substitutions actions alerts and auto- Generation mated processing Fails Alerts Corporate action based Interest Agreement substituions Cash and Non-Cash and Payment Cash Netting Divs Module Cheapest to deliver Scheduling Automated Email collateral reallocations Distribution Automation

Alerts

Recalls and Corporate Interest Settlements Off the Shelf Reports Substitutions Actions Billing

Inbound & Custodians Collateral Confirmations Cash Trade/ General Ledger/ Outbound CSDs Payments Position Accounting Systems Wide range of ready-made SWIFTs CREST etc Adjustments reports in multiple formats External Settlement Systems Custom Reports

5 Features Benefits • Manage collateral for Securities Lending, Repo, • Strengthen risk management TriParty and Cleared/Bilateral, Exchange Traded and OTC Derivatives • Single collateral platform

• Workflow Support for CCP collateral management • Clear view of counterparty exposures across multiple (EMIR and Dodd Frank) business lines

• Front-to-back office functionality from inventory • Integration of inventory with eligibility, haircut and management and collateral booking through to concentration limits settlement • Automation of manual processes • Process cash and non-cash collateral on a pool or trade basis • Intuitive workflow

• Basel Ill Liquidity Coverage Ratio support • Reduced costs

• Automate collateral management processes such as • Boost revenues through better collateral optimization, marks and margin calls with real-time updates allocation and utilization across business units

• Centralize collateral trading into a single profit • Broaden the range of collateral usage through visibility center of inventory versus acceptability

• Automate mapping of legal agreements CSA/CSD/ • Ease the burden of EMIR, Dodd Frank and Basel Ill GMRA/GMSLA etc. Compliance

• Define and apply sophisticated schedules for • Reduced operational risk haircuts and collateral eligibility • Quick and easy to deploy • Run on-demand collateral concentration scenario analysis

• Automate collateral substitutions using cheapest to deliver algorithms

• Dispute resolution workflow

• Improve decision making with accessible real-time reporting

• Interface with a wide range of third party systems and trading platforms

• Large selection of off-the-shelf and custom reporting options

6 7 Broadridge, a global fintech leader with $4 billion in revenue, provides communications, technology, data and analytics solutions. We help drive business transformation for our clients with solutions for enriching client engagement, navigating risk, optimizing efficiency and generating revenue growth. Communications Technology broadridge.com Data and Analytics

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