Northern Trust is enhancing its collateral management and liquidity solutions. The firm intends to help clients meet the requirements of implementing various regulations, such as the Dodd-Frank Act and European Market Infrastructure Regulation.

Northern Trust is enhancing its collateral management and liquidity solutions to help clients meet the requirements of implementing various regulations, such as the Dodd-Frank Act and European Market Infrastructure Regulation. 

It is anticipated, the firm said, that under the Dodd-Frank and EMIR guidelines market participants will require considerable amounts of eligible collateral and thus there will be increased demand for liquidity. 

“However, aspects of the Basel III regulation, and others, may limit the levels of collateral and liquidity available in the market, thereby creating challenges for investors,” Northern Trust said.

“The intersection of these regulations will impact institutional investors in a number of ways, particularly increasing the need for liquidity and, over the longer term, creating a collateral squeeze,” said Fiona Horsewill, head of product and strategy for Europe, Middle East and Africa.       

The solution by Northern Trust will enable clients to hold their assets in a transparent account structure, even if at the time they are being used for collateral for clearing derivative positions. 

Through the improvements, clients will be able to: view their entire asset inventory and track each asset’s location for assets held in custody with Northern Trust and outside Northern Trust; access eligible collateral for initial margin requirements; review and evaluate counterparty exposure; and monitor potential future liquidity needs.

Northern Trust is a provider of investment management, asset and fund administration, and banking solutions.