A Map of Collateral Uses and Flows

26 Pages Posted: 27 May 2016

See all articles by Andrea Aguiar

Andrea Aguiar

Morgan Stanley

Richard M. Bookstaber

Board of Regents - University of California Office of the CIO

Dror Y. Kenett

Financial Industry Regulatory Authority (FINRA); Johns Hopkins University

Thomas Wipf

Morgan Stanley

Date Written: May 26, 2016


All flows of secured funding in the financial system are met by flows of collateral in the opposite direction. A network depicting secured funding flows thus implicitly reveals a network of collateral flows. Collateral can also be presented as its own network to show collateral arrangements with bilateral counterparties, triparty banks, and central counterparties; the purpose and incentives of collateral exchanges; and participants involved. We create a collateral map to show how this function of the financial system works, especially with secured funding and derivatives activity. This paper provides insights into the increased demand for collateral, the reduced capacity for banks to act as collateral intermediaries, and examples of risks and vulnerabilities in collateral flows.

Keywords: Collateral, funding liquidity, central clearing, repo, derivatives, funding map, financial stability

Suggested Citation

Aguiar, Andrea and Bookstaber, Richard M. and Kenett, Dror Y. and Wipf, Thomas, A Map of Collateral Uses and Flows (May 26, 2016). OFR WP 16-06, Available at SSRN: https://ssrn.com/abstract=2784846 or http://dx.doi.org/10.2139/ssrn.2784846

Andrea Aguiar

Morgan Stanley ( email )

1585 Broadway
New York, NY 10036
United States

Richard M. Bookstaber

Board of Regents - University of California Office of the CIO ( email )

1111 Broadway
Oakland, CA 94607
United States

Dror Y. Kenett (Contact Author)

Financial Industry Regulatory Authority (FINRA) ( email )

Washington, DC
United States

Johns Hopkins University ( email )

Baltimore, MD 20036-1984
United States

Thomas Wipf

Morgan Stanley ( email )


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