About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Briefs

ISDA Ops by Validus: Streamlining ATE and CSA Threshold Complexity

Subscribe to our newsletter

Validus Risk Management recently launched ISDA Ops, an advanced platform that simplifies the complex task of managing ISDA Additional Termination Events (ATEs) and Credit Support Annex (CSA) thresholds. By automating calculations and real-time monitoring, ISDA Ops addresses the intricate challenges financial institutions face with customized terms and vast data volumes, enhancing efficiency and reducing operational risk. 

The management and monitoring of complex ISDA ATEs and CSA thresholds present significant challenges owing to the intricate nature of the agreements and the sheer volume of data that needs to be tracked and analysed in real time. 

  • Complexity of Customized Terms: ATEs allow parties to specify a nearly unlimited range of events that can trigger the termination of an ISDA Master Agreement. These can include credit-related defaults, significant declines in a fund’s net asset value (NAV), or incorrect tax representations. The highly customizable nature of these terms results in a complex mix of structured and unstructured data making standardization difficult and requiring bespoke solutions for monitoring each agreement. 
  • Volume of Data Across Multiple Counterparties: Financial institutions often manage thousands of trading lines across numerous counterparties, each with their own specific ATEs and CSA Thresholds. Keeping track of these varied terms manually is not only time-consuming but also prone to errors, increasing operational risk. 
  • Real-Time Monitoring Requirements: The dynamic nature of ISDA markets necessitates real-time monitoring of ATEs and CSA thresholds. Delays in identifying breaches or potential collateral calls can lead to undetected exposures and financial losses. 
  • Complex Calculations for Collateral Management: CSA Thresholds determine the level of unsecured exposure tolerated before collateral is required. Calculating these thresholds accurately involves complex computations that factor in live market data, exposure levels, and specific contractual terms. 
  • Regulatory Compliance and Risk Management: Regulatory frameworks demand stringent risk management practices, including the effective monitoring of counterparty risk and collateral adequacy. Failure to comply can result in regulatory penalties and reputational damage. 

ISDA Ops addresses these issues by providing an intelligent and scalable approach to constructing ATE and CSA Threshold conditions. The platform allows users to analyse and test conditions using live and forecasted data, enabling real-time, proactive decision-making. 

“Managing ISDA ATEs and CSA Thresholds has been a complex task for risk management teams,” said Alain Smith, Head of Client Engagement at Validus Risk Management. “ISDA Ops provides a clear, consolidated view of the data, helping users identify potential breaches and model future risks more effectively,” he said. 

Key features of ISDA Ops include: 

  • Automated Tracking and Calculation: Automatically calculates and tracks ISDA ATEs and CSA Thresholds across all counterparties, streamlining risk management processes. 
  • Real-Time Risk Management: Enables proactive decision-making by identifying potential collateral calls early, improving management of counterparty and liquidity risks. 
  • Enhanced Reporting: Offers intelligent reporting tools that simplify tracking and updating ISDA terms, increasing transparency. 
  • Scenario Analytics: Allows users to simulate potential future scenarios using live and forecasted data, proactively addressing potential risks. 

ISDA Ops integrates with Validus’s Horizon platform, including RiskView for hedging monitoring and reporting, TradeView for front-office hedging, and PortfolioView for portfolio-level risk management. This integration enables CSA Thresholds to be updated and monitored within RiskView and incorporates PortfolioView data for condition testing. 

Validus plans to deliver further enhancements to ISDA Ops before the end of the year, incorporating generative AI to efficiently parse complex language and improve data retrieval. Earlier in June, the company announced upgrades to TradeView, enabling automation of pre-trade checks. 

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Best practices for compliance with EU Market Abuse Regulation

EU Market Abuse Regulation (MAR) came into force in July 2016, rescinding the previous Market Abuse Directive and replacing it with a significantly extended scope of regulatory obligations. Eight years later, and amid constant change in capital markets regulation, technology and culture, financial institutions continue to struggle to stay on the right side of the...

BLOG

DTCC and Cboe Clear Europe Collaborate to Enhance Post-Trade Workflow for OTC Cash Equities

DTCC, the post-trade market infrastructure for the global financial services industry, is collaborating with Cboe Clear Europe, the pan-European cash equities Central Counterparty (CCP), to improve settlement efficiencies for over-the-counter (OTC) cash equities trades in UK and European markets. The collaboration aims to integrate OTC cash equities trades into Cboe Clear Europe’s cleared environment, enabling...

EVENT

AI in Capital Markets Summit New York

The AI in Capital Markets Summit will explore current and emerging trends in AI, the potential of Generative AI and LLMs and how AI can be applied for efficiencies and business value across a number of use cases, in the front and back office of financial institutions. The agenda will explore the risks and challenges of adopting AI and the foundational technologies and data management capabilities that underpin successful deployment.

GUIDE

Regulatory Data Handbook 2024 – Twelfth Edition

Welcome to the twelfth edition of A-Team Group’s Regulatory Data Handbook, a unique and useful guide to capital markets regulation, regulatory change and the data and data management requirements of compliance. The handbook covers regulation in Europe, the UK, US and Asia-Pacific. This edition of the handbook includes a detailed review of acts, plans and...