Automated collateral management service
The automated collateral management service is one of the most advanced features of the Ramses system and makes monitoring and valuing of collateral security easier and faster. In the equities depository system the object of a pledge is always the whole book-entry account, whereas in the depository system for debt instruments only a collateral value for the pledge is defined and the pledger is free to trade with the securities as long as the collateral value exceeds the required limit at all times.The customer who pledges the collateral opens a collateral securities account in the system which is pledged to the pledgee. The pledgee sets the collateral requirements for the collateral securities account, and following these instructions, Euroclear Finland defines the collateral terms according to which the collateral will be valued.
Valuation of the collateral is based on the previous trading day's market values, though it is also possible to use nominal values. The pledgee can set specific collateral terms concerning debt instruments, issuers or book-entry securities. The collateral securities account can be used for trading just like a normal book-entry securities account. All book-entry money market instruments can be deposited as collateral.
Apart from Finnish debt instruments, foreign money market instruments can be used as collateral if they can be transferred through the eLink to Finland and if the market prices needed for collateral valuation are reliably available. German debt transactions are therefore already eligible. Also money can be deposited as collateral in a collateral securities account. Each night the Ramses system calculates new book-entry specific collateral values according to the market values of the previous day.
The collateral value for the accounts is calculated by using the undervaluation given by the pledgee. German debt transactions are given their values by using the same calculation principle as for domestic transactions.
The automated collateral management service is ideal for providing collateral for customers who would like to use a trading portfolio as collateral in a flexible way.
