Market seeks effective liquidity management
David Ogier, Sales Director EMEA, shares his reflections from the recent 39th ISDA General Meeting in Amsterdam, 13-15 May 2025
Increased use of collateral has reversed the move to cash-only or clean CSAs that were a pragmatic industry response to the regulatory driven “great re-paper”, where speed to paper and simplicity were paramount. Now with ever-growing demands on cash, firms are looking to increase liquidity via broader collateral eligibility. This trend was highlighted at the ISDA AGM from their newly published ISDA Margin Survey Year-End 2024, outlining a move from 20% to 31.7% in received non-cash collateral with dealers over the last 5 years: “Cash remained the predominant form of collateral for VM, although its share declined for the fourth consecutive year from a peak of 80.0% in 2020 to 68.3% in 2024.”
Collateral management and the collateral ecosystem are moving on from a highly scripted 15-year BCBS - IOSCO mandated period of regulatory implementation. Institutions are now focusing on how to maximise operational and capital efficiency within the new collateral framework and a backdrop of higher persistent volatility.
Liquidity management was central to the conversation of leading industry experts in the Creating an Efficient Collateral Ecosystem session, Tuesday 13 May. All aspects of liquidity management were addressed including:
- Possible new collateral types, including ETFs and harmonised MMFs
- Improved utilisation of eligible non-cash assets
- Moving assets more efficiently using DLT and tokenization
- Reducing collateral requirements with pre and post trade margin optimisation
- Sell-side balance sheet optimisation
- The adoption of emergent AI solutions.
Each panel recognised that a consolidated and normalised data set of all collateral data is required to fully realise the gains of each approach. This requirement spans trading, risk and treasury functions, crossing bilateral, cleared and listed system siloes. Without complete data consolidation firms are unable to effectively manage liquidity.
Moreover due to collateral management’s connectedness, counterparty data such as custodians must be included. Both Acadia’s MarginManager and SWIFT demonstrate how powerful a post-trade common language can be. ISDA’s Common Domain Model (CDM) initiative is seeking to develop this further, enabling firms and vendors to structure all collateral data in a universal format.
This vision of a connected collateral ecosystem—comprising vendors, custodians and market participants to enable a single normalised dataset—has always been at the core of CloudMargin’s approach. Our SaaS collateral management solution ensures data accuracy and integrity through a single-system workflow for all asset classes, integrating and structuring data into a single unified record.
Whilst the CDM data and process model will enhance transparency and interoperability, the key to industry transition lies in firms adopting solutions with modern underlying technology and comprehensive ETLs, delivering increased agility, additional automation and reduced errors.
