FinReg Drives Tech Upgrades
Trading and risk systems beef up compliance features.
Providers of trading and risk management technology are enhancing their offerings to enable users to comply with the slew of Dodd-Frank rules now being promulgated.
OpenLink, for example, is making enhancements around margin analytics and clearing, all of which are in the crosshairs of regulators.
It’s expanding capabilities to provide more robust margin calculations that leverage its experience with valuations, risk analytics, market/curve modeling and collateral management.
“This will be essential for assessing impacts on liquidity and collateral as well as improving the operational efficiency of portfolio reconciliation and margin management processes,” Phil Wang, senior vice president of product management at OpenLink, told Markets Media.
A new enhanced Margin Desktop supporting both exchange traded and cleared products is available to calculate initial and maintenance margin for numerous exchanges and products, with advanced stress testing, reconciliation facilities, and the ability to incorporate independent margin validation analytic models (e.g., VaR based with different risk factors, look back, closeout and confidence level assumptions).
OpenLink’s OTC clearing solution addresses requirements across multiple asset classes in a single system – covering the commodity, interest rate, credit, currency and equity asset classes.
“The lifecycle of both OTC cleared and bilateral trades can be efficiently managed, spanning operations such as confirmations, settlements, legal documentation, credit risk exposures and margining,” said Wang.
“The movement towards OTC clearing will require enhanced margin calculations to analyze liquidity as well as validate the margin calls from brokers for the ever-expanding set of eligible products,” he said.
Trade processing workflows have been extended for the lifecycle of OTC cleared derivative products, from execution, to confirmation, matching and clearing. Connectivity options to CCPs and clearing houses are also available.
“As OTC clearing now becomes mandatory across asset classes, we are leveraging our talent and technology to provide the industry an ability to roll out access to new exchanges, clearing houses, brokers and eligible cleared products, as they emerge in the marketplace,” Wang said.
IRS trading volumes have fragmented without an equivalence agreement.
Phase 5 of the uncleared margin rules came into effect on 1 September.
Triparty repos can be executed across U.S. Treasury securities to central clearing.
CEDX opened on 6 September, offering contracts on Cboe Europe single country and pan-European indices.
A significant proportion of total collateral held with CCPs globally can be automatically optimized.