CFIF to establish collateral advisory group

The Canadian Fixed-Income Forum (CFIF) has announced the establishment of the Collateral Infrastructure and Market Practices Advisory Group (CIMPA).

CIMPA aims to promote the functioning of the Canadian securities and financing markets through improved operational efficiency, reduced market fragmentation, and industry coordination on related issues and initiatives.

CIMPA is co-chaired by Nicholas Chan, managing director and head of financial resource management at BMO Capital Markets, and Harri Vikstedt, senior policy director of market committees and initiatives at the Bank of Canada.

The group is composed of senior representatives from buy and sell side firms, custodians, prime brokers, and infrastructure providers.

CFIC is an industry-wide committee established by the Bank of Canada to discuss developments in fixed income market structure and functioning, market practices, and related policy issues.

According to the committee, since the global financial crisis, collateral management has shifted from primarily a credit risk mitigation process of managing assets pledged by one party to another, to focusing on capital optimisation.

The establishment of the new advisory group marks a recognition of the impact of this evolution on the efficiency of Canada’s fixed income market.

The advisory group aims to improve interconnectedness, standardisation, and automation of securities flows; support market functioning through the promotion of best practices for clearing, settlement and risk management; and to facilitate the adoption of the TMX and Clearstream triparty service, Canadian Collateral Management Service (CCMS).