Securities Finance Industry News | Clearstream applies AI to accelerate collateral management automation

Clearstream has announced advances in collateral management automation with the release of a new solution, OSCAR, which applies artificial intelligence (AI) techniques to analyze collateral eligibility profiles for collateral baskets .

The version of the product, named Own Selection Criteria with Automated Reasoning, was developed in collaboration with fintech Intelli-Select and its academic partner, KU Leuven.

This will accelerate the time it takes for users to develop and trade individual collateral baskets through the use of AI techniques, including knowledge representation and reasoning (KRR), machine learning and natural language processing. structured (NLP).

The service is currently in beta testing and key features of the solution will go live in Q4 2022.

This will be implemented through a phased rollout, with basket setup and trading becoming available via an initial release in Q3 2022. A second phase release in Q4 will add eligibility checking before new stakes. service upgrades, and the introduction of additional providers. board, early 2023.

The post-trade entity owned by Deutsche Börse believes it is the first commercially available collateral management tool that applies AI techniques in this way to define, create, trade and execute baskets of collateral .

Previously, he notes, creating and managing collateral baskets was a complex and time-consuming process, requiring users to manually review, compare and translate different profiles across multiple tri-party agents. These must be constantly updated in line with regulatory obligations such as uncompensated margin requirements as well as changing business needs.

OSCAR is designed to streamline these activities through the use of AI, allowing users to set their own smart eligibility criteria while reviewing inconsistencies through an automated process. Clearstream reports that the tool will also facilitate interoperability with different peers, facilitating negotiation, reconciliation and collaboration.

Commenting on the product release, Clearstream’s Head of Investor Services and Funding, Samuel Riley, said: “OSCAR reduces the time to set up and negotiate an individual basket of guarantees tailored to the purpose of a few weeks. a few hours away.

“Thus, Clearstream offers enormous relief to customer operations who can create individual, yet machine-readable baskets of collateral to maximize the value of their business collateral. With Intelli-Select, we have found a great partner to build our vision of warranty management for the industry, supporting our customers in the best possible way.

Intelli-Select co-founder and CEO Bart Coppens says, “Our solution is based on the latest research in AI techniques enabling the creation of sophisticated insights with full explainability of the reasoning process, but based on intuitive natural language inputs.

“Partnering with Clearstream gives us the opportunity to put these advanced techniques to work, solving real-world problems.”

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