Automated margin (VM & IM) solution for Asset Manager

Client type: Major international asset manager with assets in excess of $350bn

Existing collateral support: In-house spreadsheet based solution for calculation of margin. Emails for exchange of margin calls and OSTTRA triResolve for dispute resolution

Collateral profile: In-scope for VM requirements. Trading OTC derivatives in all major markets across several hundred funds, with several thousand collateral agreements

Problem

The company’s internal tools provided limited collateral management capability. This created daily challenges to manage data feeds from multiple trade and market systems, and data quality issues were frequent. The process was time consuming and required a high-level of user input and diligence. As a result, the organisation had an overreliance on counterparty calculated margin amounts and reporting, and felt they were not fulfilling their own risk management objectives.

They needed to update their processes. However, faced with a significant increase in collateral agreements due to the uncleared margin rules, any new solution needed to be fast to implement, scalable and facilitate STP.

Solution

Following an RFP process, OSTTRA triResolve Margin was selected as the solution that best suited their needs. Not only was it deemed to meet all functional requirements, it also fitted with the company strategy of adopting web-based solutions.

Key stakeholders identified a number of key advantages in OSTTRA triResolve Margin. The main drivers included its ability to proactively support the uncleared margin rules, rather than being a retro-fitted product, and unlike other offerings, it provided a seamless way to manage margin call disputes. It also offered out of the box access to the Acadia’s MarginSphere™ messaging service, which in turn would enable automated connectivity to their broker counterparties.

Due to the large volume of collateral agreements, onboarding was phased by a combination of fund and broker. The first phase, in excess of 600 collateral agreements, was live within 2 weeks. The entire onboarding process was managed by the OSTTRA triResolve service management team who took responsibility for the key tasks of collateral agreement set-up and counterparty connectivity and approval in MarginSphere.

Subsequent phases delivered automated margin connectivity for all funds and corresponding dealers, which equated to several thousand collateral agreements.