American asset management firm Northern Trust has launched an improved collateral optimisation solution to enable institutional investors to manage their collateral smoothly while complying with the requirements of regulatory reform.

The new solution utilises a variety of algorithms to manage asset selection and fulfil margin requirements.

It also enables asset managers to avoid assets from being associated as collateral when they are better placed elsewhere.

The tool comes with multiple customisable drivers that can be set according to the respective client’s liquidity management perspective.

Northern Trust corporate and institutional services president Pete Cherecwich said: “Our clients want to be strategic and nimble in managing their investment portfolios, especially with regard to collateral management – deploying the right assets at the correct time to meet regulatory requirements whilst minimising any impact on investment performance.

“Historically the collateral management process took time, resource and frankly a lot of spreadsheets. Today our advanced algorithmic optimisation solutions can achieve this objective – minimising the value of assets that need to be tied up as collateral and reducing counterparty exposure.”

At the same time, the company has now become a global custodian to enable access to buy-side, sponsored repo clearing through LCH RepoClear.

The move allows Northern Trust clients to access different lenders smoothly to enhance profitability while mitigating associated risks.