As markets grow more complex and regulatory expectations continue to rise, collateral can no longer be managed in silos or optimised in isolation, says Transcend’s European sales director Paul Wilson, who explores moving beyond reactive processes
Image: Transcend
For capital markets firms, collateral is no longer simply an operational requirement — it is a critical driver of balance sheet efficiency, liquidity resilience, and competitive advantage. As regulatory standards continue to tighten and trading and funding strategies grow more complex, the ability to deploy collateral intelligently across the enterprise has become a core strategic capability.
Despite this shift, many institutions still operate with legacy technology, manual workflows, and siloed decision-making across desks and regions. These constraints restrict visibility and limit collateral mobility, driving higher funding costs and eroding P&L. In effect, valuable assets sit idle or are deployed inefficiently, not because of market conditions, but because firms lack the infrastructure to see and move them effectively.
Collateral optimisation directly addresses these challenges by aligning asset usage with enterprise objectives — whether that means reducing funding costs, meeting regulatory requirements more efficiently, or maximising utilisation of scarce balance sheet resources. However, optimisation alone is not enough. Its effectiveness is fundamentally dependent on connectivity.
Collateral connectivity — the seamless integration of data, systems, legal entities, and market venues — enables real-time insight and action. It ensures that the right assets are available, eligible, and optimally positioned at precisely the right time. Transcend’s approach is differentiated by delivering both optimisation intelligence and the deep connectivity required to operationalise it across the global collateral ecosystem.
By combining configurable optimisation scenarios with direct connectivity to the world’s major venues, Transcend enables decision making to execution of enterprise-wide collateral optimisation. The following case studies illustrate how two global institutions leveraged Transcend to modernise their collateral strategy, delivering meaningful improvements in funding efficiency as well as better operational and risk control.
Case study one: Enterprise optimisation across equities and fixed income
The challenge
A global bank set out to unlock collateral savings — across net stable funding ratio (NSFR), liquidity coverage ratio (LCR), and related balance sheet metrics — at an enterprise level. Achieving this required optimising collateral across both global equities and fixed income financing desks, each operating with distinct requirements, technology stacks, and historically siloed operations.
Key challenges included:
• A highly complex constraint environment. Optimisation needed to account for asset types, haircuts, LCR treatment, tenor, maturity, operational movements, and bespoke firm and client-driven attributes.
• Fragmented infrastructure. Limited integration across venues and business units constrained asset mobility and obscured optimisation opportunities.
• Eligibility evaluation. Without systematic eligibility insight, teams relied on assumptions rather than analytics, leading to failed placements and unnecessary costs.
• Limited tagging and allocation precision. Inability to allocate assets at the shell level reduced the effectiveness of triparty optimisation (just allocating to the box does not get you there).
• Record-date risk. Assets were frequently stranded in suboptimal locations around record dates, diminishing usable liquidity.
Figure 1
The solution and impact
Transcend’s Cross Triparty Optimization solution delivered a centralised, intelligence-driven platform for enterprise collateral decision-making and execution:
• Comprehensive venue visibility. Daily insight into eligibility, positions, trades, and utilisation across multiple triparty agents enabled early, optimal asset positioning for end-of-day allocation.
• Configurable optimisation logic. The firm tailored optimisation rules to desk-level and cross-desk priorities — minimising haircuts, preserving liquidity, reducing buffers, managing movement costs, or incorporating counterparty-specific constraints.
• Systemic execution. Optimisation outputs flowed directly into internal systems and triparty agents, improving accuracy while reducing manual effort.
• Shell-level control. Precise shell-level preferences allowed the firm to target both economic and operational outcomes.
• Unified enterprise view. By consolidating visibility across desks and venues, Transcend broke down silos and enabled holistic optimisation.
The result was true enterprise-wide collateral control — delivering tens of millions of dollars in P&L savings, materially reduced operational risk, and significant efficiency gains across teams.
Case study two: Equities collateral optimisation across the US and UK
The challenge
A second global bank sought to optimise collateral across regionally siloed equities finance desks in the US and UK. However, several structural barriers stood in the way:
• Manual workflows. Siloed operations teams relied heavily on manual collateral selection and substitution.
• Limited automation and mobility. Lack of cross-region automation inhibits dynamic response to intraday funding needs.
• Collateral recall complexity. Re-use by counterparties made it difficult to redeploy pledged assets.
• Incomplete agreement data. Terms were not digitised, reducing eligibility evaluation precision.
• No cross-triparty coordination. The firm could not generate target state allocations across multiple venues or mobilise assets across venues systematically to achieve shell level precision.
• No scenario modeling. Teams lacked the ability to run ‘what-if’ analyses to inform strategy and forecast outcomes.
Transcend’s solution and impact
With Transcend Optimization in place, the firm transformed its equities collateral operations:
• Automated shell-level optimisation. Allocation decisions were optimised and automated across venues, reflecting asset quality, haircut, and usage constraints.
• Straight-through processing to triparty agents. STP booking eliminated manual steps, reduced operational risk, and expanded the usable collateral pool.
• Enhanced inventory transparency. Real-time visibility into positions and movements enabled proactive sourcing and better trading decisions.
• Scenario analysis capabilities. Teams modeled hypothetical strategies — such as onboarding new client assets or adjusting funding mixes — to identify the most cost-effective outcomes.
• Quantifiable results. Optimisation uncovered an opportunity to increase funding capacity by approximately US$500 million using less-liquid assets.
This marked a step-change in how the firm managed equities collateral, empowering teams with coordinated, data-driven decision-making on a global scale.
The power of collateral connectivity
Collateral connectivity is the real-time orchestration of data, systems, legal entities, and asset movements across the entire collateral lifecycle. These case studies reinforce a central principle: optimisation without connectivity is limited in impact.
Transcend’s strength lies in unlocking the full value of a connected ecosystem. Through prebuilt integrations with all major global triparty agents, internal platforms, leading vendors, more than 40 custodians, over 45 CCPs, SWIFT, Fedwire, central securities depositories, and other critical market infrastructure, Transcend delivers connectivity at scale.
This foundation — built over more than a decade — enables:
• Real-time visibility into granular asset data, obligations, and eligibility constraints.
• Enterprise-wide optimisation aligned to firm-specific objectives.
• Automated collateral allocation and substitution through STP workflows.
• Rich dashboards offering a 360-degree view of inventory, usage, and opportunity.
• Scenario analysis to evaluate funding strategies and balance sheet impacts.
• Precise data tagging and booking orchestration to reduce reconciliation risk.
• Coordinated movements across desks, regions, and business functions.
• Proactive response to market, regulatory, and liquidity-driven change.
Without connectivity, optimisation remains theoretical. With it, optimisation becomes a measurable driver of business value.
Utilising optimisation to create a strategic advantage
As markets grow more complex and regulatory expectations continue to rise, collateral can no longer be managed in silos or optimised in isolation. True enterprise collateral optimisation requires intelligence, automation, and — most critical — connectivity.
Transcend equips financial institutions with the technology, data, and infrastructure needed to move beyond reactive processes and unlock the full strategic value of their collateral. Whether the objective is reducing funding costs, improving balance sheet efficiency, or modernising legacy operations, Transcend enables firms to turn collateral into a competitive advantage.
NO FEE, NO RISK 100% ON RETURNSIf you invest in only one securities finance news source this
year, make sure it is your free subscription to Securities Â鶹ӰÊÓ´«Ã½ Times
Image: Transcend 
