Sophis Launches Full STP Module For Securities Lending And Repo

Sophis, a leading provider of cross asset, front to back office solutions, has launched a securities lending and repo module. As follow up to the collateral management module launched last year, the new module is designed to enhance straight through

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Sophis, a leading provider of cross-asset, front-to-back-office solutions, has launched a securities lending and repo module. As follow-up to the collateral management module launched last year, the new module is designed to enhance straight-through processing (STP) throughout the entire cash and securities financing chain, improve risk control and optimise collateral. This module extends financing possibilities and provides specialised front, middle and back-office functionalities.

For front-office, the module offers a global view of assets’ availability, and access to all known market practices and related pricing (multi-currency lending transactions, coupon rebates, all commissioning models including feemarks, etc.) For middle-office, the module offers cross-asset and stock lending collateral management, high usability of the securities and cash margining process, and real-time control of exposure per agreement, based on effective settlement events instead of forecasted events. For back-office, the module offers an automated settlement/payment process, tri-party reconciliation, and real-time P&L and billing computation.

The new module meets the increasingly sophisticated needs of market participants involved in securities lending and borrowing and collateral optimisation. The 2006 margin survey issued by the International Swaps and Derivatives Association (ISDA), states that collateral in use grew by ten percent from 2005 to 2006 to $1.33 trillion. In addition, the number of collateral contracts in circulation grew by 55% to 109,733 in 2006.

IXIS Corporate & Investment Bank, a leading securities lending player with over 50,000 deals a year and a subsidiary of Groupe Caisse d’Epargne, is a development partner and user of RISQUE’s newly launched securities financing module.

“As our equity finance business continues to grow, we handle increasingly complex cross-asset products, thousands of margin calls daily, and have to mitigate against growing counterparty credit risk issues,” says Etienne Bur, Global Head, Equity & Arbitrage, IXIS Corporate & Investment Bank. “It is critical we have a system we can rely on to effectively manage all of our collateral positions and contracts. Sophis was a natural partner as we have been working with them on the equity derivatives business for years now, and all our positions are already in the Sophis Database. We are excited about the true front-to-back architecture, efficiency, improved risk control and reduction in costs Sophis’ stock lending and borrowing module brings to our securities financing activities.”

“As financial institutions look to centralise and rationalise their cash and securities financing activities to reach a critical mass in a small margin business, they require a comprehensive front-to-back office solution for all aspects of this business – from negotiation through collateral management to billing,” says Herv Vinciguerra, Chairman, Sophis. “Sophis has spent a substantial number of man hours on the creation of this module and that, coupled with our IXIS Corporate & Investment Bank partnership, positions us as having one of the strongest and most flexible offerings on the market.”

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