Torstone Technology, DataArt, Valphi and ITG also have FinTech announcements.
New Variation Margining Rules Hit March 1
Starting March 1, financial services firms will be subject to “new rules that will require them to exchange variation margin on their non-cleared derivatives trades,” but many of them may miss that deadline, says Scott O’Malia, CEO of the International Swaps and Derivatives Association (ISDA) in the Jan. 31 installment of his derivatiViews blog, “All Eyes on March 1.”
“Four weeks out, the task of meeting that deadline looks as daunting as ever,” says O’Malia who predicts “that many firms won’t make it, raising the prospect they’ll be temporarily unable to access derivatives markets.”
While the exchange of variation margin on derivatives trades is common, O’Malia says that the new rules set strict requirements on “everything from eligible collateral to settlement timing, and these specifications need to be reflected in counterparties’ credit support documentation.”
The bottom line is that firms will have to modify existing agreements or setting up new ones — “a monumental task made all the more difficult by the late publication of final national rules in some cases. And it can’t be done unilaterally: changes to each credit support annex (CSA) agreement need to be agreed by the other party,” O’Malia says.
Firms will have to “bilaterally negotiate the necessary changes to existing CSAs and then to use those for both legacy and new trades,” O’Malia says. “Given the variability in terms within existing CSAs, and the potential pricing impact a change in terms might have on a legacy portfolio, this approach is requiring manual intervention, analysis and discussion with each counterparty. And, for the larger dealers, those discussions will have to take place thousands of times, reflecting the size of their client base and the number of CSAs they have outstanding.”
O’Malia argues that ISDA is providing solutions to help with compliance but “there’s a finite legal resource to negotiate the changes, both within dealers and their clients – and those resources are stretched to the limit. There are just too many documents that need to change – approximately 200,000 – and too little time.”
O’Malia is calling for time-limited relief “to give derivatives users the crucial extra months needed to get their documents in line with the requirements.”
ISDA will be monitoring progress on the issue and “we’ll feed that information to regulators regularly in the run-up to March 1,” O’Malia says. “Dealers and their clients will continue to pull out all the stops to make the implementation deadline, but there simply may not be enough time.”
In the meantime, ISDA is offering help at: http://bit.ly/2cpt8gA
Torstone Offers Link to UnaVista’s ARM Reporting Service
Torstone Technology, a securities and derivatives processing software vendor, reports that it will connect to London Stock Exchange Group’s UnaVista Approved Reporting Mechanism (ARM).
The new link will allow users of Torstone’s InfernoRC (Regulatory Compliance) module to comply with the transaction reporting obligations of the Markets in Financial Instruments Regulation (MiFIR), vendor officials say. “UnaVista will be connected to all required National Competent Authorities (NCAs) in Europe so firms will be able to address all the reporting in one place,” according to Torstone, which says that the testing environment is now available, ahead of the MiFIR reporting go-live date in January 2018.
Torstone Technology has headquarters in London and offices in New York, Singapore and Hong Kong, officials say.
DataArt Helps Valphi Develop Financial Analysis Tool
Paris-based start-up Valphi, a market research specialist, and software consultancy DataArt have developed a proprietary IT tool intended to help improve decision-making at financial institutions while also providing information on investments with visualizations, officials say.
The financial analysis tool, “which was invented, envisioned and designed by Valphi’s founders and implemented by DataArt,” offers data taken from multiple financial indicators, including some unique to Valphi, officials say. The visualizations allow users to recognize patterns rather than use an algorithm-driven trading platform. The solution uses technology to link human processes “back into financial services, enabling analysts to easily distinguish trends, correlations and outliers,” officials add.
ITG Expands Crossing Platforms to Include Thailand
Broker and technology provider ITG has added trading in Thai equities to the POSIT and POSIT Alert crossing platforms, making Thailand the eleventh country in Asia-Pacific where POSIT Alert block crossing is available.
The Thai addition extends the block crossing network to 37 countries worldwide, officials say.
“In addition to launching POSIT and POSIT Alert for Thai equities, ITG is also implementing the PowerScore trading measurement system across the Asia Pacific region,” vendor officials say. “The PowerScore feature works to improve user experience and overall performance across the POSIT network by providing a score to each user based on metrics that contribute to positive interactions among users on the platform.”
“There is a clear demand for block liquidity in the region, as demonstrated by our 66% growth in value traded in POSIT Alert in 2016,” says Ofir Gefen, co-head of execution services for ITG in Asia Pacific, in a prepared statement.
Investment Technology Group offers liquidity, execution, analytics and workflow solutions to asset management and brokerage firms.
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