Collateral management and optimisation product of the year: CloudMargin

CloudMargin’s collateral and margin management system covers all asset and instrument classes, from pre-trade to post-trade settlement and reporting. The system is used by sell-side firms, such as global investment banks and brokerages, and buy-side firms, including asset managers and institutional investors involved in derivatives and that need to collateralise their trades.

The single-instance platform enables much-needed cost efficiencies and risk mitigation for firms facing regulatory and cost pressures, as well as operational challenges. It facilitates exception-based, straight-through processing (STP) by centralising data, connecting to industry utilities and automating workflow. Open access to its comprehensive, real-time collateral data helps users manage risk and utilise assets more efficiently.

The uncleared margin rules (UMR) have created new challenges for industry participants, which CloudMargin has worked hard to address. Its holistic initial margin (IM) solution enables clients to calculate IM, agree margin amounts automatically and instruct settlement to third-party custodians and tri-party agents via its extensive settlement network. The broader connectivity to other key services and providers in the industry further facilitates firms’ IM compliance.

Since adding a Swift service in 2016, CloudMargin has been able to establish connectivity to all four major tri-party agents, which now facilitates UMR compliance. As part of the effort to help phase five and potential phase six firms prepare and give more options for in-scope firms, CloudMargin has now expanded its network to include nearly 60 custodians globally. As part of its comprehensive settlement capabilities, CloudMargin also offers bespoke client integrations and an extensive range of application programming interfaces, as well as new integrations with distributed ledger technology partners. Finally, a new dashboard offers a broad view of payment status across all custodians, instrument classes and payment methods.

CloudMargin provides the technology for the collateral platforms of three of the industry’s largest infrastructure providers: Acadia, IHS Markit and Finastra. As such, CloudMargin has an evolving role in UMR compliance and collateral management within the industry.

By integrating with Acadia’s margin management services, CloudMargin was able to help generate significant efficiencies for firms managing both variation margin and IM. In addition to providing the technology for IHS Markit’s collateral management service, CloudMargin is also integrated with the firm’s portfolio valuations and IM calculation services. Last year, CloudMargin began providing the technology behind Collateral Management as a Service through Finastra’s open platform. This joint solution facilitates end-to-end STP of derivatives transactions and related collateral management workflows. All these initiatives support automation and optimisation of the collateral management process, helping clients reduce costs and realise significant efficiency gains.

Judges said:

• “Strong collateral and margin management system built for the cloud.”
• “Good to see endorsement from Acadia, Finastra and IHS Markit.”
• “Nice to see evidence that the firm is committed to giving customers more options – in the form of the additional custodian connections.”

Stuart Connolly, Chief Executive at CloudMargin, says:

“We are honoured to win this award, as we have focused intensely on enhancing our platform to be a fully automated solution that offers broader optimisation capabilities to meet the needs of banks and large institutions. Our evolution over the years from a nimble platform to one that includes robust, sophisticated functionality, while retaining that straightforward, easy-to-use experience allows us to meet the demands of the most complex operations. This has been instrumental in expanding our appeal beyond the buy side to major sell-side institutions. We’re bringing tremendous cost efficiencies and reducing risk while making collateral usage more efficient for some of the world’s largest banks, brokers and asset managers.”

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