Historically, collateralised deals were executed bilaterally, with the asset being traded (cash, securities, derivatives) moved one way and collateral moved the other. This required a significant operational effort to manage.

Even with the use of Tri-Party services, collateral management is often manually intensive, requiring different sets of data to be reviewed, cross-checked and reconciled to complete the process on any given day. This means risk managers often receive their collateral data late in the day, and even then it may not attain the necessary level of detail.

This is the industry challenge that Rule Financial took on in Q4 last year when it developed Total Tri-Party to help trading organisations analyse, collate and display all collateral positions, giving visibility across liabilities world-wide and enhancing the ability to control risk. With a state-of-the-art graphic user interface based on Adobe Flex, the application shows past trends, the present situation and future requirements: alongside archiving data and trend forecasting. It also provides real-time reporting on collateral activity from the Tri-Party agents, individually or combined and detailed information for optimised risk management.

Besides producing the first product of its kind, Rule Financial was innovative in the way it went around building the product:

• Initial concept to first live installation took only 10 weeks.
• SCRUM methodology was adopted to facilitate weekly ‘sprints' of build and release.
• A prototype was produced using MS-Excel and a browser to establish feedback and scope from interested clients.
• Technology choices - including Hibernate, Spring Batch and Adobe Flex 3 - were made based on input and experience from Rule Financial's technical specialists.
• The product has been built to run on a single laptop - great for client demonstrations - or a full 3-tier server-based environment.
• The product is largely ‘environment agnostic'. It supports most databases and will run on Windows, Linux and Unix.
• The use of UI mark-up technologies, such as Flex, have allowed for a very quick turn around on new business requirements.
• Tri-Party agent and risk-system interfaces were re-cycled from other projects.
• The use of automated testing tools helped ensure rapid regression and new functionality testing.

Finextra verdict: Rule has demonstrated impressive time to market to address a key area in collateral management that was in sore need of automation and standardisation.