Risk Australia: Clearing broker collateral replacement mechanisms could put asset managers in breach of client mandates

Third-party collateral requirements not acknowledged in current standard clearing broker contracts


The inclusion of a commitment to refund the value but not the exact type of collateral posted with clearing brokers in standard documentation could put asset managers in breach of client mandates, according to Annette Mullen, head of rates at Colonial First State Global Asset Management.

Speaking at the Risk Australia conference held in Sydney yesterday, Mullen said that the standard contract put forward by clearing brokers allows the flexibility to replace the economic value of collateral

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