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

Upcoming Webinar: Overcoming the Barriers to Implementing RegTech Solutions: The View from Either Side of the Fence

Date: 9 June 2020 Time: 10:00am ET / 3:00pm London / 4:00pm CET RegTech holds the promise of targeted, agile and often low-cost solutions to the real-world problems faced by financial institutions across the board. So why is it so difficult to get RegTech projects off the ground? RegTech solutions providers complain that it’s difficult...

BLOG

A Quiet Revolution: Changing Attitudes to Oversight and Contingent NAV Capabilities

The legal and regulatory landscape for the asset management industry has transformed over the past decade – with major upgrades such as AIFMD, FATCA, CRS and BEPs, in addition to a myriad of local compliance requirements. As the reporting demands of both investors and regulators grow, so too does the need for specialist knowledge, processes...

EVENT

TradingTech Summit London

The TradingTech Summit in London brings together European senior-level decision makers in trading technology, electronic execution and trading architecture to discuss how firms can use high performance technologies to optimise trading in the new regulatory environment.

GUIDE

Entity Data Management Handbook – Sixth Edition

High-profile and punitive penalties handed out to large financial institutions for non-compliance with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations have catapulted entity data management up the business agenda. So, too, have industry and government reports on the staggering sums of money laundered on a global basis. Less apparent, but equally important, are...