Bankers Trust Co. is selling its risk-management skills to other participants in the over-the-counter derivatives market.

The company is making available its C-Trac+ system, which helps manage collateral pledged by a counterparty in a derivatives trade, such as a swap or forward contract.

Bankers Trust, one of the largest participants in the derivatives market, has been using the system for four years.

"Collateral has been taking off as a risk-management tool," said Thomas F. Wiese, a Bankers Trust vice president. The value of collateral in the over-the-counter derivatives market -- primarily government agency bonds and government securities -- exceeds $ 1 0 billion, according to Bankers Trust.

Fending Off Regulatory Intervention

The bank announced its program for monitoring counterparty collateral just days after an international group of banks -- known as the Group of Thirty -- released recommendations to help derivative-market participants better manage real and potential risks.

The report was seen as an attempt to fend off regulatory intervention in the unregulated over-the-counter derivatives market.

Bankers Trust officials said that C-Trac+ should help banks implement some of the recommendations.

"Every top manager is worrying about how to implement and how to handle collateral or accumulate it," said Eileen Bedell, a managing director at Bankers Trust who markets the company's trading systems.

When a C-Trac+ user enters into a collaterized derivative transaction, the system tracks counterparty exposure, revalues the collateral periodically, nets collateral obligations by counterparty, and acts as custodian for the assets used as collateral.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.