Modification History
Not applicable.
Unit Descriptor
Unit descriptor |
This unit describes the performance outcomes, skills and knowledge required to monitor collateral activity, process agreements and manage disputes as required. This unit may apply to job roles subject to licensing, legislative, regulatory or certification requirements so Commonwealth, State or Territory requirements should be confirmed with the relevant body. |
Application of the Unit
Application of the unit |
This unit applies to a job roles involving collateral management in the financial markets sector. |
Licensing/Regulatory Information
Not applicable.
Pre-Requisites
Prerequisite units |
||
Employability Skills Information
Employability skills |
This unit contains employability skills. |
Elements and Performance Criteria Pre-Content
Elements describe the essential outcomes of a unit of competency. |
Performance criteria describe the performance needed to demonstrate achievement of the element. Where bold italicised text is used, further information is detailed in the required skills and knowledge section and the range statement. Assessment of performance is to be consistent with the evidence guide. |
Elements and Performance Criteria
ELEMENT |
PERFORMANCE CRITERIA |
1. Process collateral agreements and credit support documentation |
1.1. Terms and conditions for a credit support document (CSD ) are negotiated with a predicted market to market (MTM ) position 1.2. Netting of trades is agreed between the parties to facilitate the collateral agreement, and signed off by the legal department. 1.3. The credit rating of the collateral counterparty is assessed using external ratings and own organisational guidelines so the agreed Credit Support Annexe (CSA) terms reflect the appetite for counterparty risk and limits in the CSD 1.4. A complete a legally binding collateral agreement is drafted, authorised and processed in accordance with organisational policies and procedures |
2. Monitor collateral activity |
2.1. The net MTM value of the trades covered by the CSD is used to calculate the collateral margining activity. 2.2. Margin calls are initiated when the terms of the CSA dictate 2.3. Market values for non-cash collateral such as debt is monitored and updated daily, checking that any cuts in valuations are applied in line with agreed framework 2.4. Derivative credit exposures on long-term and short-term deals are identified and updated on the organisational credit management system 2.5. Threshold amounts and monitored to determine options to use a break clause if necessary 2.6. Collateral deals are negotiated and replaced when a break clause has been invoked 2.7. Call and return amounts are processed promptly and accurately 2.8. Segregation of roles is observed, e.g. margining team do not manage collateral settlements |
3. Manage collateral disputes or defaults |
3.1. Differences in valuations are identified and escalated to the correct stream. 3.2. Portfolios are checked, valued and reconciled on a regular basis to ensure collateral management data is current and valid 3.3. Disputes are dealt with according to organisational policy and procedures 3.4. Unresolved disputes or defaults are documented and referred to appropriate personnel where required 3.5. Non-settlement or fails of agreed collateral are investigated and escalated to the appropriate risk stream in line with agreed Service Level Agreements (SLAs). |
Required Skills and Knowledge
REQUIRED SKILLS AND KNOWLEDGE |
This section describes the skills and knowledge required for this unit. |
Required skills |
|
Required knowledge |
|
Evidence Guide
EVIDENCE GUIDE |
|
The Evidence Guide provides advice on assessment and must be read in conjunction with the performance criteria, required skills and knowledge, range statement and the Assessment Guidelines for the Training Package. |
|
Overview of assessment |
|
Critical aspects for assessment and evidence required to demonstrate competency in this unit |
Evidence of the ability to:
|
Context of and specific resources for assessment |
Assessment must ensure:
|
Method of assessment |
A range of assessment methods should be used to assess practical skills and knowledge. The following examples, in combination, are appropriate for this unit:
|
Guidance information for assessment |
Range Statement
RANGE STATEMENT |
|
The range statement relates to the unit of competency as a whole. It allows for different work environments and situations that may affect performance. Bold italicised wording, if used in the performance criteria, is detailed below. Essential operating conditions that may be present with training and assessment (depending on the work situation, needs of the candidate, accessibility of the item, and local industry and regional contexts) may also be included. |
|
A credit support document (CSD ) is: |
|
Market to market (MTM ) is: |
NB A minimum transfer amount for single trades is a minimum amount that can be called and transferred to avoid costs of small transfers. |
Netting : |
|
Organisational guidelines and credit limits may include: |
|
Financial products may include: |
|
Transaction details may include: |
|
Non -cash collateral valuation percentages (sometimes called a 'haircut') apply to: |
|
Threshold amounts are: |
|
A break clause : |
|
Disputes may arise due to: |
|
Unit Sector(s)
Unit sector |
Financial markets |
Competency field
Competency field |
Co-requisite units
Co-requisite units |
||