OTC derivatives and treasury products technology provider, Calypso Technology has released Calypso Version 12 (V12) of its cross-asset, front-to-back office platform, which is equipped for the regulatory changes made, following the Dodd-Frank Act and other market structure changes that are demanding stronger control over trading and risk.
The new release is said to improve on best practice standards with stronger seamless integration across asset classes and between functional layers, as it consolidates previously siloed businesses.
Were starting to see real interest and demand in cross-asset class trading and risk management systems in global capital markets driven by a multitude of factors, says Dushyant Shahrawat, CFA, Senior Research Director at TowerGroup, a Corporate Executive Board Company. Cross-asset class functionality is not only a facility to capture transactions in different asset classes, but also includes the ability to provide integrated analyses – P&L, sensitivities, scenario analysis, stress testing – across all asset classes in an integrated, coherent manner.”
Within the past year, Calypso has invested over $40 million in R&D to develop V12. The platform continues in the tradition of Calypsos capital markets leadership, which capitalized on the companys offering of the worlds first cross-asset OTC derivatives central clearing solution – now live at exchange clearinghouses in Europe, Asia and the Americas.
Calypso V12 processes rates, data handling speeds and functional performance, which the company says has substantially increased through improvements and tuning of platform infrastructure. The result is significantly increased trading capacity and higher straight-through processing (STP) performance.
Recently, the Head of Securities Finance at Calypso, revealed that the way collateral is managed has to change become more of a front-office function as impending regulation changes, following the credit crisis will have a significant effect on margin calls.
The credit crisis was a defining moment for collateral, says David Little, Head of Securities Finance at Calypso. This is because the collateral, or the lack of it, made the difference between the firms which survived and which didnt survive. Before the credit crisis the way collateral was managed was more like a back-office function within each separate business silo and the business assumed that collateral was a resource in plentiful supply. So each collateral management desk would just draw on the pool of available collateral and make the collateral pledges as they fell through and manage it that way.
On July 21 2010, the Dodd-Frank Bill was signed into law. Under new rules, all OTC derivatives will have to cleared through central counterparty (CCP) clearing. In turn, the firm needing to clear trades will need to provide cash collateral, which will lead to higher costs and available cash in order to make margin requirements.
Since the credit crisis there are a number of changes going on that threaten the oversupply of collateral, so collateral is going to be needed to manage more tightly in a world where it is a more precious resource, says Little. So you are going to have look at all your available inventory together with all your collateral obligations and understand what have you got, where it is being used, where have you got some freedom and flexibility to manage it more closely.
Click here to watch the full interview with David Little at Calypso talking about collateral issues and how impending regulation changes are in fact still uncertain and how it will effect custodial operations.
(LB)