Initial margining product of the year: Calypso Technology

With over 35,000 users in 60+ countries around the world, Calypso Technology is a true pioneer in bringing innovative technologies that reimagine the capital markets. Calypso Technology takes home this year’s Asia Risk Award for initial margining product of the year in recognition of its cross-asset, front-to-back solutions and the services it provides for the markets.

Sophie Marnhier-Foy, Calypso’s product management director for margin clearing and risk, explains how the initial margining tool “was built initially for the CCPs starting to develop OTC clearing in the aftermath of the 2008 crisis. This provided a very strong foundation for a margin solution, which we have leveraged for other markets”.

Over the years, the solution has been expanded upon to also help meet the needs of clearing members and end-users, and eventually offer a solution for when the official initial margin rules kick in.

RG Manalac, Apac managing director, explains what makes Calypso’s initial margin product and module unique: “First and foremost, Calypso is a true front-to-back solution and our initial margin modules sit on top of that. So, all your investment management needs, your treasury needs, your collateral needs are all sitting within a single platform, single database. That’s huge because it allows an institution to really feel strongly that all their data is being calculated and tracked correctly because it is all on the same platform.”

We’ve seen a growing number of regulations being added to the regulatory landscape over the years, such as the Basel III framework, and Calypso works to support its clients, expanding to meet the needs of clearing members and end-users, providing a continuously updated compliance solution that covers ever-changing margin methodologies and new regulations. Calypso works to optimise risk and margin solutions, with simple, end-to-end solutions with a flexible option for it to be hosted either on-site or in the cloud.

In recent months, Covid-19 has placed additional pressure on Calypso.

Marnhier-Foy says that margin exposure at this time is greater than ever and, combined with the strong market volatility, “we’re seeing a direct impact on the margin metrics”. Calypso’s risk and stress scenario platform proved instrumental for its clients in navigating 2020’s market conditions.

Manalac explains how Calypso takes a client-centric approach in its solutions: “First and foremost we’re focused on helping institutions meet their compliance requirements. But we’re also focused on creating efficiency from a cost perspective, both in terms of the regulatory side, where the more there is, the more manpower you need to meet those guidelines. We’re trying to minimise that as much as possible and help to save our clients on those costs – in being able to provide that single solution that provides that technology for them to leverage across the board, from a regulatory and compliance perspective.”

One Asia Risk judge noted that “the way in which Calypso worked with their clients to develop their solutions is impressive. It’s also clear their development team works closely with their risk and compliance teams to ensure the software is designed in a manner that meets the demands of regulators in multiple jurisdictions”.

Calypso has a broad and solid foundation in the Asian markets, with more than 40 clients across Apac, including some of the major CCP players, and it continues to expand into new, strategic, fast-growing markets in the region. So it is always building and updating its solutions with regional clients in mind. Marnhier-Foy explains: “Globally, if you look at how the markets are evolving, Asia is moving very fast. We are witnessing a tremendous market growth and, as part of this growth, you need new and stronger solutions.”

With the delayed phase-five of initial margin rules due to start in September 2021, Calypso is focused on adjusting its tools, combining margin simulation and the initial margin threshold, to enable its clients to be up to date with their compliance.

A lot of Calypso’s smaller clients will be caught by phase five or six of initial margin rules, so the solution will be particularly applicable over the next few years.

Manalac further explains how “so many changes are happening right now in the marketplace, with different margin methodologies and parameters being used, and so the flexible framework we’ve built in allows us to really adapt to that fairly quickly and ensure our clients stay up to speed with all the changes happening in the marketplace.”

Looking forward, Marnhier-Foy says that they expect to work more and more in partnership with their clients.

“So you can expect not just new features in the product, but more user groups, more webinars, more focus on operational risk, and more tools to meet new regulatory requirements efficiently,” she says.