Assessor Resource

FNSFMK508
Monitor and process collateral

Assessment tool

Version 1.0
Issue Date: May 2024


This unit describes the skills and knowledge required to monitor collateral activity, process agreements and manage disputes as required.

It applies to individuals who use highly specialised knowledge, analytical skills and systematic approaches for problem solving and making judgements about financial decisions in complex situations.

Work functions in the occupational areas where this unit may be used are subject to regulatory requirements. Refer to the FNS Implementation Guide Companion Volume or the relevant regulator for specific guidance on requirements.

You may want to include more information here about the target group and the purpose of the assessments (eg formative, summative, recognition)


Evidence Required

List the assessment methods to be used and the context and resources required for assessment. Copy and paste the relevant sections from the evidence guide below and then re-write these in plain English.

ELEMENT

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Process collateral support documentation

1.1 Source collateral support annexe (CSA) relevant for specified clients

1.2 Interpret and analyse implications of CSA for managing collateral with counterparty

1.3 Identify requirements of CSA and its impact on how collateral is measured and managed

1.4 Execute collateral requirements identified in line with organisational policy

2. Monitor collateral activity

2.1 Use net market to market value of trades covered by credit support documents to calculate collateral margining activity

2.2 Initiate margin calls when terms of CSA dictate

2.3 Monitor and update daily market values for non-cash collateral debt, checking that any cuts in valuations are applied in line with agreed framework

2.4 Identify and update derivative credit exposures on long-term and short-term deals on organisational credit management system

2.5 Monitor threshold amounts to determine options to use break clause if necessary

2.6 Negotiate and replace collateral deals when break clause has been invoked

2.7 Process call and return amounts promptly and accurately

2.8 Observe segregation of roles according to organisational requirements and industry codes of practice

3. Manage collateral disputes or defaults

3.1 Identify differences in valuations and escalate to correct stream

3.2 Check, value and reconcile portfolios on regular basis to ensure collateral management data is current and valid

3.3 Deal with disputes according to organisational policy and procedures

3.4 Document and escalate unresolved disputes or defaults to appropriate personnel as required

3.5 Investigate and escalate non-settlement or fails of agreed collateral to the appropriate risk stream in line with agreed Service Level Agreements

Evidence of the ability to:

manage collateral agreements and transactions and enter details in organisational systems

evaluate and adjust financial positions

manage collateral disputes.

Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.

To complete the unit requirements safely and effectively, the individual must:

explain a range of commonly used financial products

explain the key features of organisational requirements relating to collateral agreements, including International Swaps and Derivatives Association (ISDA), credit support documents (CSD) and credit support annexes (CSA)

outline key features of financial markets report structures and characteristics.

Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial markets field of work and include access to:

office equipment, technology, software and consumables

financial markets product information.

Assessors must satisfy NVR/AQTF assessor requirements.

Submission Requirements

List each assessment task's title, type (eg project, observation/demonstration, essay, assingnment, checklist) and due date here

Assessment task 1: [title]      Due date:

(add new lines for each of the assessment tasks)

Assessment Tasks

Copy and paste from the following data to produce each assessment task. Write these in plain English and spell out how, when and where the task is to be carried out, under what conditions, and what resources are needed. Include guidelines about how well the candidate has to perform a task for it to be judged satisfactory.

ELEMENT

PERFORMANCE CRITERIA

Elements describe the essential outcomes.

Performance criteria describe the performance needed to demonstrate achievement of the element.

1. Process collateral support documentation

1.1 Source collateral support annexe (CSA) relevant for specified clients

1.2 Interpret and analyse implications of CSA for managing collateral with counterparty

1.3 Identify requirements of CSA and its impact on how collateral is measured and managed

1.4 Execute collateral requirements identified in line with organisational policy

2. Monitor collateral activity

2.1 Use net market to market value of trades covered by credit support documents to calculate collateral margining activity

2.2 Initiate margin calls when terms of CSA dictate

2.3 Monitor and update daily market values for non-cash collateral debt, checking that any cuts in valuations are applied in line with agreed framework

2.4 Identify and update derivative credit exposures on long-term and short-term deals on organisational credit management system

2.5 Monitor threshold amounts to determine options to use break clause if necessary

2.6 Negotiate and replace collateral deals when break clause has been invoked

2.7 Process call and return amounts promptly and accurately

2.8 Observe segregation of roles according to organisational requirements and industry codes of practice

3. Manage collateral disputes or defaults

3.1 Identify differences in valuations and escalate to correct stream

3.2 Check, value and reconcile portfolios on regular basis to ensure collateral management data is current and valid

3.3 Deal with disputes according to organisational policy and procedures

3.4 Document and escalate unresolved disputes or defaults to appropriate personnel as required

3.5 Investigate and escalate non-settlement or fails of agreed collateral to the appropriate risk stream in line with agreed Service Level Agreements

Evidence of the ability to:

manage collateral agreements and transactions and enter details in organisational systems

evaluate and adjust financial positions

manage collateral disputes.

Note: If a specific volume or frequency is not stated, then evidence must be provided at least once.

To complete the unit requirements safely and effectively, the individual must:

explain a range of commonly used financial products

explain the key features of organisational requirements relating to collateral agreements, including International Swaps and Derivatives Association (ISDA), credit support documents (CSD) and credit support annexes (CSA)

outline key features of financial markets report structures and characteristics.

Assessment must be conducted in a safe environment where evidence gathered demonstrates consistent performance of typical activities experienced in the financial markets field of work and include access to:

office equipment, technology, software and consumables

financial markets product information.

Assessors must satisfy NVR/AQTF assessor requirements.
Copy and paste from the following performance criteria to create an observation checklist for each task. When you have finished writing your assessment tool every one of these must have been addressed, preferably several times in a variety of contexts. To ensure this occurs download the assessment matrix for the unit; enter each assessment task as a column header and place check marks against each performance criteria that task addresses.

Observation Checklist

Tasks to be observed according to workplace/college/TAFE policy and procedures, relevant legislation and Codes of Practice Yes No Comments/feedback
Source collateral support annexe (CSA) relevant for specified clients 
Interpret and analyse implications of CSA for managing collateral with counterparty 
Identify requirements of CSA and its impact on how collateral is measured and managed 
Execute collateral requirements identified in line with organisational policy 
Use net market to market value of trades covered by credit support documents to calculate collateral margining activity 
Initiate margin calls when terms of CSA dictate 
Monitor and update daily market values for non-cash collateral debt, checking that any cuts in valuations are applied in line with agreed framework 
Identify and update derivative credit exposures on long-term and short-term deals on organisational credit management system 
Monitor threshold amounts to determine options to use break clause if necessary 
Negotiate and replace collateral deals when break clause has been invoked 
Process call and return amounts promptly and accurately 
Observe segregation of roles according to organisational requirements and industry codes of practice 
Identify differences in valuations and escalate to correct stream 
Check, value and reconcile portfolios on regular basis to ensure collateral management data is current and valid 
Deal with disputes according to organisational policy and procedures 
Document and escalate unresolved disputes or defaults to appropriate personnel as required 
Investigate and escalate non-settlement or fails of agreed collateral to the appropriate risk stream in line with agreed Service Level Agreements 

Forms

Assessment Cover Sheet

FNSFMK508 - Monitor and process collateral
Assessment task 1: [title]

Student name:

Student ID:

I declare that the assessment tasks submitted for this unit are my own work.

Student signature:

Result: Competent Not yet competent

Feedback to student

 

 

 

 

 

 

 

 

Assessor name:

Signature:

Date:

Assessment Record Sheet

FNSFMK508 - Monitor and process collateral

Student name:

Student ID:

Assessment task 1: [title] Result: Competent Not yet competent

(add lines for each task)

Feedback to student:

 

 

 

 

 

 

 

 

Overall assessment result: Competent Not yet competent

Assessor name:

Signature:

Date:

Student signature:

Date: