Financial industry focuses on collateral as Basel III nears

With Basel III rules pending, the trading and clearing industry has been making changes and adopting models for managing collateral. Uncertainty is the driving factor as "we have seen a range of forecasts on the potential collateral shortfall from a number of institutions -- including the European Central Bank, the International Monetary Fund, the Bank of England and ISDA -– who are in the best position to know," said Saheed Awan, global head of collateral management at Euroclear. "All these forecasts vary so widely that it begs the question: Does anybody really know?"

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