A-Team Insight Blogs

SmartStream Partners with Numerix on ISDA Collateral Management

Share article

Financial software provider SmartStream, has confirmed a new referral agreement between its Transaction Lifecycle Management (TLM) platform and US-based risk technology specialist Numerix. The partnership will support TLM users in complying with the International Swaps and Derivatives Association (ISDA)’s margin requirements for non-centrally cleared derivatives.

TLM Collateral Management offers an automated data management solution designed to reduce operational risks associated with collateral management. The new partnership with Numerix will give the platform access to advanced computational abilities making it possible to generate the risk sensitivities required by ISDA SIMM that are leveraged as input into initial margin calculations. As a result of the partnership, therefore, TLM expects a subsequent reduction in counterparty disputes and operational costs for clients dealing in collateral management for OTC derivatives.

“As new transactions become subject to initial margin requirements, front-to-back SIMM calculations, including the generation of fast and accurate SIMM sensitivities, have become critical,” says Steve O’Hanlon, CEO of Numerix. “By partnering with SmartStream we are happy to make Numerix SIMM capabilities available to a greater set of market participants.”

The margining of non-cleared derivatives has long been a central focus of the international financial reform agenda, and key changes on margin requirements for uncleared derivatives were introduced under the European Market Infrastructure Regulation (EMIR) in February 2017, requiring counterparties who are in scope to exchange margin on their over-the-counter (OTC) derivatives contracts that are not cleared through a central counterparty (CCP), implemented in phase-in stages from 2017-2020. With stage four (relating to entities with group notional amounts above €0.75trn) are due to come in from September 2019 and the final stage expected in September 2020, implementation is over halfway to completion already.

To assist the industry in meeting complex margin requirements, ISDA created the Standard Initial Margin Model (SIMM), first introduced in December 2013. In December 2018 the association published the latest ISDA SIMM Version 2.1, including updates based on the full recalibration and industry back-testing of the methodology and a calibrated historical volatility ratio for the interest rate asset class, to help firms to comply with the next phase of margin rule implementation and to provide transparency in the collateral management space.

Leave a comment

Your email address will not be published. Required fields are marked *

*

Related content

WEBINAR

Recorded Webinar: High noon for surveillance: resolving tension between the costs of false positives, challenges of calibration, and compliance

Date: 30 January 2020 Time: 10:00am ET / 3:00pm London / 4:00pm CET When it comes to trade surveillance, regulators want firms to do their own alert calibration, examine all alerts, and keep auditable records. Firms need to balance the real cost of false positives with the technical challenge and risk of self-calibrating and auto-calibrating,...

BLOG

Broadridge Uses Blockchain to Address European SRD II Compliance

With the Shareholder Rights Directive II (SRD II) regulatory compliance deadline fast approaching, intermediaries supporting institutional and/or retail clients face one of the biggest changes in European corporate governance in many years. And according to Broadridge, many businesses are not yet ready for the transition – which is expected to place considerable pressure both on...

EVENT

Breakfast Briefing: FRTB London

The FRTB Breakfast Briefing will examine key focus areas and priorities for banks in 2020 and offer guidance, advice and expertise for tackling the challenges and pain points around implementing the FRTB regulation.

GUIDE

Regulatory Data Handbook 2019/2020 – Seventh Edition

Welcome to A-Team Group’s best read handbook, the Regulatory Data Handbook, which is now in its seventh edition and continues to grow in terms of the number of regulations covered, the detail of each regulation and the impact that all the rules and regulations will have on data and data management at your institution. This...