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Principia Standardises Integration, Ongoing Surveillance and Management of Collateral Performance Data

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Principia Partners, a solution provider for the management and administration of structured finance portfolios, today announced the launch of Principia Structured Finance Platform (Principia SFP) Version 6.2. The latest upgrade helps financial institutions and investment managers to track, monitor, analyse and report on the collateral pool performance of any fixed income asset, including asset backed securities (ABS), residential mortgage backed securities (RMBS), commercial mortgage backed securities (CMBS), collateralised debt obligations (CDOs), collateralised loan obligations (CLOs) and covered bonds. It provides a standardised, end to end operational infrastructure to normalise and more efficiently manage ongoing collateral performance data, regardless of the asset class or data source.

A new standard interface into Principia SFP resolves the challenges and inefficiencies associated with integrating performance and cash flow data into the ongoing management and oversight of structured finance portfolios. The system automates the processing of external data from any independent performance data provider (for example, Intex, Lewtan, Markit, Bloomberg, Trepp, Moody’s, S&P) or bond trustee, as well as proprietary data resulting from the internal credit analysis of loan-by-loan information. Data for multiple deals, from disparate data sources, is integrated on a single platform to display accurate and consistent performance metrics on-demand, across the business. Organisations can manage and maintain compliance with risk limits, perform rigorous stress tests and deliver timely reports detailing performance measures at the portfolio, deal, tranche or collateral level.

The Basel II Framework Enhancements state that in order to qualify for the new risk weightings, institutions: “Must be able to access performance information on the underlying pools on an ongoing basis, in a timely manner. Such information may include, as appropriate: Exposure type; percentage of loans 30, 60 and 90 days past due; default rates; prepayment rates; loans in foreclosure…”

With Principia SFP Version 6.2, portfolio managers, risk analysts and compliance staff have the flexibility to choose from over 350 pre-defined performance measures to ‘slice and dice’ fixed income and structured credit portfolios. This includes the ability to monitor, analyse and report on loan-to-value ratios and cumulative deal level losses; to stress test default, recovery and prepayment rates; and the ability to view collateral pool delinquency rates (for example, 30, 60 or 90 days), across any stratification of that pool. Clients can also add unique performance measures, as demanded by the requirements of their business.

“We are seeing a growing demand from financial institutions and investment managers looking to reduce the inefficiencies and risks associated with managing and integrating multiple databases and data sources for different structured finance deals,” said Douglas Long, EVP business strategy, Principia Partners. “Policy makers are making sure that organisations with long term investment goals involving securitised assets have a robust operational framework in place to really understand their investments on an ongoing basis. That’s not possible on spreadsheets and systems that aren’t developed specifically to adapt to the dynamic requirements of structured finance.”

The Financial Stability Board, advisors to the G20, reiterated the importance of the Basel II Framework Enhancements to supervisors and regulators last month. Their address also highlighted the International Organisation of Securities Exchange Commission’s recommendations on how to better inform and protect investors by: “Including initial and ongoing information about underlying asset pool performance.”

Principia SFP V6.2 is available immediately and can be provided as a stand-alone system or as an upgrade for existing Principia SFP users.

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