30 June 2026
For years, banks have targeted achieving a single view of exposure across derivatives, repo, securities lending and prime brokerage. Yet most firms still operate with fragmented visibility. This is not simply a systems integration challenge or a shortfall in risk infrastructure. It is a data and legal interpretation problem hiding in plain sight. Until legal rights, collateral mechanics and netting provisions are consistently captured and made operational, cross-product exposure management will remain more aspiration than reality.
Cross-product exposure and collateral efficiency was a key theme discussed at this year’s ISLA Annual Securities Finance & Collateral Management conference, with continued emphasis on the challenge of moving from siloed product views driven my technology fragmentation, to a more integrated, legally robust exposure framework.
The destination is not controversial. Banks need a shared exposure and collateral view across products, supported by the underlying legal agreements that are translated into structured data and connected to risk, capital and liquidity processes. Where institutions continue to struggle is in the layer between signed agreements, and any subsequent amendments and operational decision-making. That missing link is what prevents a theoretically coherent exposure framework from becoming an executable one.
This is why so much attention has turned to the Common Domain Model (CDM) and Distributed Ledger Technology (DLT). Both matter. CDM creates a common way to represent the events, relationships and terms that drive exposure management. DLT offers a path to efficient synchronisation across participants and platforms. But neither delivers value if the underlying legal and contractual data remains incomplete, inconsistent or inaccessible.
The real bottleneck is contract intelligence. In many institutions, the determinants of exposure still sit inside negotiated PDFs, side letters and legal schedules that were never designed to feed enterprise-wide decisioning. As a result, firms may invest heavily in risk technology while still lacking confidence in the enforceability assumptions and collateral logic that underpin their models.
This matters because exposure is not just a market risk calculation. It is shaped by contractual reality: what can be netted, what collateral is eligible, when rights can be exercised, and how close-out is determined under stress. If those terms, and many other terms are not structured and operationalised, the promise of a single exposure view will remain elusive.
What leading firms need is a repeatable chain from contract to clause extraction, from clause extraction to structured legal data, and from that data to netting sets, collateral sets, pricing and exposure calculation. This chain is the foundation for proving netting benefits, improving capital efficiency and supporting more resilient operating models across products.
1_ Treat legal agreement data as core infrastructure rather than as a legal archive.
2_ Invest in digitising and structuring contractual terms in a way that downstream platforms can consume.
3_ Align agreement, collateral and event data to common models such as CDM where they exist today and lay the foundation where they don’t.
4_ Prepare for DLT-enabled operating models with the discipline to ensure legal enforceability remains the anchor, not an afterthought.
Firms that solve this problem early will do more than improve exposure reporting. They will build a stronger foundation for capital efficiency, collateral optimisation and future market infrastructure change. As the industry moves toward increasing standardisation, automation and DLT-enabled operating models, the quality of contract intelligence will increasingly separate firms that can adapt at scale from those that cannot.
The bigger point is this: cross-product exposure management will be won by making contractual reality computable. The institutions that recognise that now will be far better positioned to unlock the value of netting, optimise collateral and compete in the next generation of market infrastructure.
