Central counterparty clearing support product of the year: Adenza

Central counterparty clearing support product of the year: Adenza

Adenza’s Calypso clearing support product provides holistic, integrated clearing on a single platform and offers a huge range of functionalities. It is used by all actors in the clearing ecosystem from central counterparties (CCPs) and clearing members to banks and investment managers.

The product’s latest functionalities were much sought-after throughout 2022 as financial institutions dealt with huge increases in margin calls and volatile collateral values. This was due to rising inflation, the ripple effects of the Covid-19 pandemic and the Russian invasion of Ukraine causing volatility spikes across all asset classes. 

It became more vital than ever for financial firms to accurately calculate the size of their end-of-day margin calls from all CCPs and exchanges to avoid unexpected calls that could jeopardise profit. CCPs also needed to be able to respond immediately to market changes and looked for ways to strengthen their margin exposure calculations. 

Many turned to Calypso’s latest upgrade (version 16), which features an enhanced margin engine with new tools to manage ever-changing regulatory requirements and new market conditions. 

“We are proud to report that most CCP clients have now upgraded to our latest version,” says Gil Guillaumey, head of strategy, capital markets at Adenza, adding that the majority of over-the-counter (OTC) CCPs are Adenza clients.

Calypso offers full end-to-end clearing capabilities for OTC and exchange-traded derivatives (ETD), which include: pre-trade what-if and novation simulation; post-trade margin calculation and reconciliation; reporting and risk limits; margin calls; and cross-margining. It also offers backtesting tools, procyclicality effect management tools, cross-product clearing tools and an offering to ensure compliance with the uncleared margin rules (UMR).

Additionally, there is full integration with Adenza’s core solution, which covers critical functions such as client onboarding, valuation and margin, risk monitoring and limits, trade lifecycle, fees, novation and clearing, collateral management, members services, default management, and settlement and accounting. 

With the expansion of clearing volumes, the adoption of regulatory metrics such as the standardised approach to counterparty credit risk and UMR regulatory initial margin has made it critical for firms to integrate risk and collateral management. Additionally, crisis volatility has led to a flight to quality when it comes to collateral, meaning firms can gain competitive advantage by having a central cash and security inventory and allocating it optimally.

While the product is global, it is regionally nuanced, taking into account different jurisdictional approaches to collateral and margin accounts.

Judges said:

  • “A very complete product with strong management oversight to stay abreast of market changes.”
  • “The product addresses issues that matter in the clearing space, such as the breakdown of support for cross‑margining of listed and OTC derivatives.”

Gil Guillaumey, head of strategy, capital market solutions at Adenza, says:

Gil Guillaumey, Adenza

“We are honoured to receive this award that further establishes us as the leader in OTC and ETD clearing. Adenza’s Calypso integrated collateral, clearing and securities finance platform is highly valued by CCPs (many are clients), clearing members, banks and investment managers. Our recent innovations around backtesting, procyclicality, cross-product fluidity and ETD new margin models exemplify Adenza’s ongoing commitment to enable market participants to manage clearing risks and costs – and respond rapidly in challenging environments.”

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