The new system TRADExpress Client Clearing addresses the challenges faced by the clearing industry as it is heavily impacted by regulatory reforms following the G20 mandate for central clearing of OTC derivatives, as well as Basel III.

Profit margins in prime services are squeezed by diminishing OTC trading, among other things, and the need for automation and efficient work flows increase as swaps are standardized and centrally cleared. The central clearing of swaps and Basel III's new capital standards mean that investors will need to be increasingly collateral-smart and closely watch margin requirements.

Cinnober's TRADExpress Client Clearing makes it possible to integrate a bank's entire client clearing service in a single system — across all geographic markets and all asset classes — for OTC as well as listed instruments. The benefit is a real-time overview of clients' net risk at the clearing bank and at each clearinghouse. This approach also gives a cost-efficient and extendable solution compared to system silo approaches, where a patchwork of applications handles the different markets and asset classes.

This is made possible by a flexible account and instrument structure, and an innovative plug-in architecture, which enables the use of as many risk calculation models as needed. This makes the system asset class-agnostic and enables new markets and complex products to be added with short time-to-market.

TRADExpress Client Clearing offers automation and efficient work flows for trade reconciliation, exception management and trade allocation. Also the processes for on-boarding new clients and adding further marketplaces and clearinghouses are streamlined and follow defined work flows.

The system shares a large part of the underlying architecture with the clearing system that Cinnober has delivered to several leading clearinghouses, including BM&FBOVESPA and LME Clear. All processing is in real time with the same level of system reliability that an exchange requires.

"Having a parameter-driven solution that supports many different market models will be decisive for future success in the client clearing business," says Veronica Augustsson, CEO of Cinnober. "Flexibility, extensibility, performance and cost-efficiency are key system requirements for clearing banks to stay competitive and develop attractive clearing services as the new regulatory landscape evolves. We are excited about launching yet another offering towards the bank segment and thereby giving them a high-quality alternative based on premier technology."