Tri-party collateral management can be useful for gaining systematic efficiency and cost saving in the stock lending process, and can add value to both parties' portfolios, but implementation is not straightforward. Tri-party collateral managers are having a field day. While most banks are labouring under the burden of Basel Ⅱ, the Markets in Financial Instruments Directive (MiFID) and other capital regulatory directives, these institutions are positively revelling in it. The service they provide enables securities trading houses, in particular broker dealers, hedge funds and other players in the stock lending and borrowing game, to control and manage the cost of regulatory capital.
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