Collateral management - Deep dive

This course is intended for anyone wishing to continue their learning beyond the foundation module and explore in greater depth the collateral management techniques employed by investment managers and financial market participants.

Whoever has watched "The Wolf of Wall Street" has likely struggled to understand the jobs, products, jargon that surround financial markets. Some of us are still trying to get our way out of this financial jungle and clarify the associated strategies. Let's demystify these!

In close collaboration with PwC's subject matter experts, PwC Academy has developed a comprehensive, multi-layered training curriculum for junior and more experienced financial industries’ employees and managers alike, who seek to gain a solid knowledge of derivative instruments.

With this second module, participants will further dive into the realm of collateral management by exploring the mechanism behind this activity such as type of collateral, margin call and other relevant features. In a second step, the focus will be on the operational lifecycle and the relevant key documentation.

By the end of this training, participants will be able to:

• understand the fundamental characteristics of collaterals;
• determine the types of collateral required for various scenarios;
• gain a detailed understanding of collateral operations and their lifecycle;
• understand the associated risks and protection framework.

1. Refresher on collateral management foundation module:

• Definition, purpose and key functions of collateral management
• Role of collateral in reducing counterparty risk and enhancing liquidity
• Types of collateral: cash vs non cash, acceptable vs unacceptable collateral, collateral acceptability and haircuts
• Comparison collateral and margin: margin in derivatives contract vs collateral in financing agreements
• Initial margin and variation margin

2. Collateral management lifecycle

• Process of posting collateral in response of margin calls or credit agreements
• Role of clearinghouses, CCPs and bilateral arrangements
• Monitoring collateral value to ensure adequacy and minimize risk
• Frequency and triggers for margin calls
• Substitution of collateral during a transaction's lifecycle

3. Collateral management documentation

• Key documentation: ISDA CSA, GMRA and GMRA annexes
• Enforceability, dispute resolution and triggers

This training is coordinated by Laurent Dubois, Director at PwC Luxembourg.

Laurent Dubois is a director at PwC Luxembourg with over a decade of experience in the banking industry and several years in asset management on both product and corporate sides. Since joining PwC in 2008 within the audit practice, he has specialised in alternative investments, focusing on private debt structures and fund of funds. Laurent has worked closely with leading promoters and asset managers, gaining extensive knowledge of the asset management sector and its challenges. He holds the title of Réviseur d’entreprises agréé in Luxembourg and has contributed to projects for clients such as Ardian, Lombard Odier, Degroof Petercam, and BBH.