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Evidence Guide: FNSFMK508 - Monitor and process collateral

Student: __________________________________________________

Signature: _________________________________________________

Tips for gathering evidence to demonstrate your skills

The important thing to remember when gathering evidence is that the more evidence the better - that is, the more evidence you gather to demonstrate your skills, the more confident an assessor can be that you have learned the skills not just at one point in time, but are continuing to apply and develop those skills (as opposed to just learning for the test!). Furthermore, one piece of evidence that you collect will not usualy demonstrate all the required criteria for a unit of competency, whereas multiple overlapping pieces of evidence will usually do the trick!

From the Wiki University

 

FNSFMK508 - Monitor and process collateral

What evidence can you provide to prove your understanding of each of the following citeria?

Process collateral support documentation

  1. Source collateral support annexe (CSA) relevant for specified clients
  2. Interpret and analyse implications of CSA for managing collateral with counterparty
  3. Identify requirements of CSA and its impact on how collateral is measured and managed
  4. Execute collateral requirements identified in line with organisational policy
Source collateral support annexe (CSA) relevant for specified clients

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Interpret and analyse implications of CSA for managing collateral with counterparty

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Execute collateral requirements identified in line with organisational policy

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Monitor collateral activity

  1. Use net market to market value of trades covered by credit support documents to calculate collateral margining activity
  2. Initiate margin calls when terms of CSA dictate
  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
  4. Identify and update derivative credit exposures on long-term and short-term deals on organisational credit management system
  5. Monitor threshold amounts to determine options to use break clause if necessary
  6. Negotiate and replace collateral deals when break clause has been invoked
  7. Process call and return amounts promptly and accurately
  8. Observe segregation of roles according to organisational requirements and industry codes of practice
Use net market to market value of trades covered by credit support documents to calculate collateral margining activity

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Initiate margin calls when terms of CSA dictate

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Negotiate and replace collateral deals when break clause has been invoked

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Process call and return amounts promptly and accurately

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Manage collateral disputes or defaults

  1. Identify differences in valuations and escalate to correct stream
  2. Check, value and reconcile portfolios on regular basis to ensure collateral management data is current and valid
  3. Deal with disputes according to organisational policy and procedures
  4. Document and escalate unresolved disputes or defaults to appropriate personnel as required
  5. Investigate and escalate non-settlement or fails of agreed collateral to the appropriate risk stream in line with agreed Service Level Agreements
Identify differences in valuations and escalate to correct stream

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Deal with disputes according to organisational policy and procedures

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

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

Completed
Date:

Teacher:		 Evidence:

 

 

 

 

 

 

 

Assessed

Teacher: ___________________________________ Date: _________

Signature: ________________________________________________

Comments:

 

 

 

 

 

 

 

 

Instructions to Assessors

Evidence Guide

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

Required Skills and Knowledge

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.