David White, the London-based head of sales for triResolve at TriOptima, says regulatory changes and client demands for more automated processes drove the swift acceptance of triResolve Margin, voted Best Collateral Management Solution via the FTF News Technology Innovation Awards for 2018.
(Last year, the industry responded strongly to TriOptima’s counterparty exposure management service triResolve Margin when it became clear that regulatory changes would drive up margin call volumes, explains David White, the London-based head of sales for triResolve at TriOptima. In fact, triResolve Margin was voted Best Collateral Management Solution via the FTF News Technology Innovation Awards for 2018. White has spent more than a decade serving financial services markets. Before his time at NEX TriOptima, he has worked as an investment banking consultant, a manager for Sapient Global Markets, and as a derivatives consultant. He took time out his busy schedule to answer our questions.)
Q: Why was triResolve Margin created and launched?
A: The introduction of the uncleared margin rules in 2016 required firms to calculate and exchange collateral daily, with zero thresholds.
As a result, margin call volumes ballooned and the need for new processes that are scalable, auditable and able to calculate different margin amounts in parallel became clear.
Recognizing the need for innovation, we developed triResolve Margin.
Q: What was the best moment from triResolve Margin’s first full year in business?
A: Our proudest moment of our first full year in business, 2017, was undoubtedly the amazing take-up from the industry – which saw us sign over 100 clients. These included the full spectrum of market participants including dealers, regional banks, asset servicers, fund managers, insurance companies and corporates.
The growth has continued as companies reassess their collateral management processes in the new regulatory environment.
Q: Why do you think triResolve Margin has grown so rapidly?
A: We have grown rapidly due to our ability to simplify what can be a complicated process.
By leveraging the triResolve portfolio reconciliation service, triResolve Margin is unique in its ability to bring transparency and provide a truly automated margin call process.
With advanced dispute analytics and a cost-effective pricing model, triResolve Margin enables firms to increase operational efficiency and focus on the risk and regulatory compliance.
Q: What customer and revenue achievements have you experienced in 2018?
A: Throughout 2018 we have continued to experience exceptional revenue growth, averaging eight percent per quarter.
We have doubled the client count of our nearest competitor and continue to receive positive feedback from the market.
Q: How important to triResolve Margin’s success is the direct access to triResolve’s portfolio reconciliation data?
A: It’s integral. Without direct access to the underlying portfolio reconciliation data we could not offer the market a truly automated process.
By joining the portfolio reconciliation and margin call processes together, clients are able to know what their counterparty exposure is before sending out their margin calls.
Q: What is next for triResolve Margin for the rest of 2018 and beyond?
A: We will continue to evolve to meet the ever-expanding demands of our clients as they come under new regulatory pressures.
One of our key initiatives is supporting firms to comply with the initial margin requirements which are being phased in based on a notional threshold which reduces over time.
We’ve developed a seamless solution for firms to calculate their inputs, manage their margin calls and resolve their disputes. It’s already been adopted by phase one and two firms, so throughout the rest of 2018 and 2019/2020 we will be enabling the buy-side and regional banks to meet the requirements as they come into scope.
We are also focused on helping firms increase their operational efficiency through automation; from call delivery to call acceptance, outgoing pledge of collateral to eligibility checks and acceptance on incoming collateral. This enables our clients to adopt an exception-based approach, so their focus can switch from manual processing to dispute resolution and analysis.
Q: What market trends could impact triResolve Margin and the wider collateral management space?
A: The market is increasingly looking to move away from inbuilt systems which can be costly to build and can struggle to keep pace with regulatory developments.
Instead, they are more open to outsourcing to specialist vendors and tend to favor web-based solutions over installed software.
By using web-based solutions, clients eliminate the need for costly upgrades and lengthy installation periods. We’re constantly hearing from our clients that this is one of the key USPs [unique selling propositions] of triResolve Margin, as it enables us to get clients live within a day and be incredibly cost efficient compared to installed solutions.
Another trend is related to the initial margin requirements, specifically the market’s adoption of the ISDA Standard Initial Margin Model (SIMM).
If you review the initial margin rules, they dictate that firms can calculate initial margin in one of two ways — either through a regulatory-approved model or via a schedule-based percentage of notional approach.
Calculation is arguably quite easy, as firms can access the calculation off the shelf from ISDA.
The challenge arises in calculating the inputs to the ISDA model on a daily basis. This requires the calculation of trade-level sensitivities, which has proved onerous.
Our initial margin solution provides out-of-the-box sensitivity calculations for ISDA SIMM, making it simpler for the market and streamlining the rest of the initial margin process.
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