Following the financial crisis of 2008, regulators in many countries have looked at ways to bring transparency to the OTC derivatives markets.
Regulators identified trading via central clearing counterparties (CCPs) as the most effective way of making markets more transparent. CCPs are also seen as a way of mitigating counterparty credit risk and reducing the likelihood of systemic contagion in the event of a large interconnected firm defaulting.
To achieve these aims, the Dodd Frank regulations in the US and EMIR in Europe mandate the central clearing of all standardized derivatives trades.
Collateral managers and traders now face added complexity in their roles as initial and variation margin need to be posted to CCPs. EMIR and Dodd Frank also require more frequent, often intraday margin calls. This process places a strain on operations and increases the amount of eligible collateral firms must source for pledging to CCPs.
The 4sight collateral management solution offers a range of features that help ease the transition to trading via CCPs. The collateral system can help users to reduce the operational burden of the CCP margining process, optimise collateral flows and create new opportunities for revenue generation in the new market structure.
The 4sight collateral management solution allows users to process collateral and margin calls when trading via CCPs. The system's intuitive workflow guides users through the posting of initial margin, variation margin (per currency), default fund, buffer adjustment and ad-hoc margin calls.
The system offers real time updates and supports margin calls on
both a start of day and intraday basis. The functionality has been
designed so that it can be used to reflect multiple CCPs and/or
Clearing Brokers/FCMs (if you are not a direct member).
4SF supports this functionality for customers acting as:
For further information on the CCP support in the 4sight Xpose
system for Securities Lending, Repo and Derivatives collateral
management or a product demonstration, please Contact Us
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