05.20.2015

Clearing Technology Spreads From CCPs

05.20.2015
Terry Flanagan

Veronica Augustsson, chief executive of Cinnober, said the Swedish firm is working on a project to supply banks and brokers with the same risk systems as it provides to clearing houses.

Augustsson told Markets Media that Cinnober currently supplies technology to central counterparties such as LME Clear, the London Metal Exchange’s clearing house which launched last September.

“Our clearing house customers want real-time measurements of their exposures because if they run their clearing cycle or risk calculation just a few times a day, clients will need to post extra collateral to anticipate shortfalls,”Augustsson added. “Clients want to net positions across multiple asset classes and reduce margin payments.”

She will be speaking on an Emir panel at the Markets Media European Trading Network at the London Stock Exchange on May 21.

“We are working on a project to allow brokers and banks to use the same technology,” she added.

Europe is lagging behind the US, but the new Emir regulations will mandate that certain over-the-counter products move into central clearing.

In the U.S., Clarus Financial Technology reported on its blog that nearly 100% of transactions executed ton a swap execution facility so far this month have been cleared.

Clarus said: “Having nearly 90% of the US-named market in US dollar swaps cleared is quite a success. Not to mention over half of the US-named swap market trading on a SEF. This is generally a testament to the success of CFTC’s swap reporting rules.”

In an audience poll at Euroclear’s annual Collateral Conference , 71% believed that buyside firms will be able to clear OTC derivatives before Emir arrives, but few can justify cost.

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