GM Picks GlobeOp to Manage OTC Derivatives Collateral
September 7, 2010
General Motors has become the first U.S. corporation to select GlobeOp Financial Services to provide daily collateral management, valuation and reconciliations across its over-the-counter (OTC) derivatives portfolio, GlobeOp said Tuesday.
GlobeOp, a New York-based hedge fund administrator with expertise in OTC contracts, said it will support General Motors’ Treasury department with management of foreign exchange, commodity and interest-rate derivatives activities.
Hedge funds and corporations are among the largest users of OTC derivative contracts to hedge interest-rate and currency risk.
While GlobeOp did not discuss the reasons for GM’s decision, it follows GM’s reorganization from a Chapter 11 bankruptcy filing in 2009 – the largest in U.S. history.
“Reducing operational risk through diversified counterparty exposure and close collateral management is an important fundamental best practice,” said Jon Anderson, GlobeOp’s head of valuations and OTC derivatives. “We believe that the use of external processing service providers such as ours will become a trend for corporations as it is for hedge funds and traditional fund managers.”
Anderson said that using GlobeOp's web-based real-time portal called GoOTC, GM’s Treasury team can drill down to status of each transaction with each counterparty, and monitor the collateral which has been posted as well as any margin calls made.
