Collateral Management Agreement (CMA)

 

Collateral management agreement (CMA) safeguards inventory financing
between a lender and a borrower where the goods are used as collateral

 

DRUM is appointed by the lender to act as custodian over the goods until the terms of financing have been met and cleared by the borrower.

The following phases are required to establish a CMA:

1. Due diligence – Site survey

Operational managers site survey the storage facility to confirm how DRUM will monitor, manage and safeguard the goods. The survey will identify:

  • layout, procedures and security
  • technical and operational ability
  • receipt, storage & release operations
  • storage management’s understanding of the disciplines required within a CMA
  • “critical control points” required by DRUM to count, measure, weigh, monitor and secure
  • whether the storage facility is suitable for or capable of being managed under CMA

2. Set-up & deployment

Operational managers & operational centers prepare and deploy inspectors on completing:

  • preliminary operational instructions and identified “critical control points”
  • reporting schedules & report lines
  • location-specific training
  • extensive coordination with the storage facility management

3. Management & reporting 

Inspectors on being deployed verify “critical control points” to ensure they can:

  • count, measure, weigh, segregate & secure independently of the storage facility
  • physically supervise the goods at any time
  • audit the goods at any time
  • confirm with London HQ any receipt or release instruction
  • immediately inform on any event or movement

4. Reporting & rotation 

Inspectors will:

  • report daily on every activity, receipt & release
  • report immediately if there is an event or attempted event
  • rotate in / out of the project every three months to guarantee independence

5. Quality Control

Projects are quality controlled through:

  • real-time interaction with project managers
  • constant quality control by operations managers
  • regular internal audit visits
  • planned & staggered staff rotation

 

Why DRL

Meticulous project planning

Guaranteed independence