In other FinTech News, AcadiaSoft is working with Xceptor while the FIX Trading Community wants to help with MiFID II/MiFIR compliance.
Variation Margin Rule Takes Effect March 1
CloudMargin, at web-based collateral and margin management solution, and SmartDX, which provide trade and relationship document generation, collaboration and processing announced that they have partnered to address the daily variation margin (VM) rule that goes into effect March 1 in the European Union, United Kingdom, United States and elsewhere, officials say.
The immediately available offering “enables buy-side investors and other over-the-counter (OTC) derivatives market participants to quickly and comprehensively sign new ISDA Documentation or ‘repaper’ their OTC agreements with existing or new counterparties through SmartDX,” officials say.
The combination then seamlessly passes “the operational data to CloudMargin’s collateral management workflow tool to handle the vastly increased volume of collateral transactions,” officials say. “CloudMargin estimates that, on average, the new VM rules will increase firms’ collateral activity by 500 percent.”
“Despite the VM rule taking effect on Wednesday, only a small percentage of market participants have put in place a plan or the tools needed to post daily variation margin,” says Lee McCormack, CloudMargin head of strategy and product development.
“The operational challenge of implementing these changes is very difficult at this scale unless you can use technology to better manage processes, documents and ultimately the data in those documents,” says Robin Moody, global head of SmartDX, in a statement.
AcadiaSoft & Xceptor Target Margin Calls Transacted via Email
AcadiaSoft, maker of the MarginSphere electronic margin processing tool, and Xceptor, a vendor of process automation and data management for post-trade operations, have signed an agreement to jointly create Relay, a service that will allow “high volumes of margin calls currently transacted by email to be automated through the MarginSphere platform,” officials say.
The Relay service will use Xceptor’s data capture capabilities to “automatically recognize, capture and process data from counterparties outside the existing AcadiaSoft network,” officials say. The Xceptor services are used for trade confirmation, tax reclaim and collateral management processes.
The new service will support banks that are expecting increases in margin volumes “triggered by the introduction of new margin regulations related to margin requirements for uncleared, over-the-counter (OTC) derivatives,” officials say. “Relay will speed up the process and remove the burden of manual processing from customers, allowing greater volumes of margin calls to be processed without additional FTE requirements.”
FIX Adds Enhancements for MiFID II, MiFIR
The FIX Trading Community is enhancing the FIX electronic trading protocol to help user firms meet the requirements of MiFID II and MiFIR, targeting trade reporting requirements, venue waiver indicators, algorithm and trader IDs and short-sell marking.
The standards has published a document detailing extensions to the FIX Protocol to meet the requirements of MiFID II and MiFIR.
The enhancements will help firms meet the regulatory reporting requirements of MiFID II and MiFIR, which “require a lot of effort,” says Hanno Klein, EMEA chair, global technical committee, FIX Trading Community. (Klein is also a senior vice president with Deutsche Borse.)
“During the detailed analysis conducted by the various FIX working groups together with the FIX Global Technical Committee, it turned out that the majority of business requirements from ESMA were already covered by the FIX Protocol, building on the foundational work completed for Dodd-Frank Act reporting requirements,” Klein says in a statement.
“We were able to re-use many of the existing concepts and workflows and have, so far, not needed to add a single new message to the FIX Protocol. This significantly lowers the impact on existing users of the FIX Protocol when passing information to each other to allow regulatory reporting to ESMA [European Securities and Markets Authority],” Klein says.
The FIX protocol group now offers three extension packs available for firms to download and implement as part of their work on MiFID II. They are as follows:
- EP206 — Clock synchronization
- EP216 — Post-Trade Flagging Obligations
- EP222 — Critical data requirements identified by the sub-working groups on transparency, and order data and recordkeeping.
