Unblocking the flow of collateral

Five leading custody houses reveal how they have adapted their strategies to the new regulatory environment

Global custodians have a big job on their hands. Regulations are forcing most over-the-counter derivatives trades to be centrally cleared through a central counterparty while liquidity requirements under Basel III will leave banks having to hold more higher-quality assets on their books to withstand financial shocks.

The new requirements will almost certainly mean the market will have to find anything between $500bn and $6 trillion of additional assets, according to industry estimates.

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