What is the collateral manager doing?
The collateral manager is an employee of a financial organization that is responsible for the supervision of the collateralization process. This process is the one where a form of a credit or credit agreement is secured by an asset that becomes the creditor's assets if the debtor does not pay the money. In many cases, the collateral manager for the organization of third parties is working to help the creditor and the debtor. The agreement is a contract between the creditor, the debtor and the company administration company. Because such shops have so many variables, such agreements are usually created rather than simply adapted to the template. This includes two main elements. The first is to assess the statistirizico that the debtor will not be able to repay the loan and therefore what is a fair and adequate amount of collateral.
The second element is the assessment of the real value for the specific asset that the debtor cits as security. Assignment of RealNo market values can be a complicated problem, as some forms of securing, such as the financial asset, may vary over time in the price. The collateral manager can help independently assess the likelihood that the creditor considers the collateral more or less valuable if and when it fails compared to the agreement.
, by its very nature, it also includes extensive legal work, which may include ensuring that both parties are protected by agreement. It may also include the development of a system favorable to both parties to resolve any disputes.
Where open credit investment positions are involved, for example, the company allows the investor to buy shares using borrowed money, the collateral manager can solve the margin calls. The rules of such a transaction usually stipulate that the investor must make another payment if the stock price falls because the price reduction increases the chance of the debtor that causes the loss of the sale of shares, so it is less likely to allow SPTo keep the original loan. The amount of the money that the investor must pay will vary according to the price of the shares and some of the money will be paid to the investor if the stock price increases. This money acts as a form of collateral, as it fails if the investor cannot repay the loan.