AcadiaSoft has launched MarginSphere 2, the latest version of its electronic margining platform for over-the-counter derivatives.
The platform will enable more than 200 buy-side and sell-side firms that comprise the AcadiaSoft community to efficiently comply with 2016 regulatory requirements, including mandatory exchange of bi-lateral initial margin, automated processing of segregated collateral assets, verified management of collateral disputes, and unbundling of collateral movements into currency specific silos.
The new regulations, promulgated by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions (IOSCO), will take effect on 1 September 2016.
Once implemented, it is expected that margin volumes will surge three to 10 times above current levels. AcadiaSoft has claimed that MarginSphere 2 will allow this increased margin activity to be managed without a directly proportional increase in operational costs.
“A lot of firms are just now waking up to the fact that margin volumes are about to explode, making traditional manual processing impractical and expensive,” stated Chris Walsh, COO of AcadiaSoft.
“MarginSphere 2 provides the industry with a standardised electronic solution well in advance of the September 2016 regulatory compliance deadline.”
AcadiaSoft’s MarginSphere platform fully automates the margin process, including matching of margin, comparison of necessary inputs and agreement of calls and movements.
It enables participants to match margin calls immediately so disputes can be resolved or minimised before agreeing margin movements, while interacting with in-house and partner collateral systems to automate the margin process.
With electronic margining standards in place, AcadiaSoft’s efforts are now focused on the collaborative development of other services to facilitate additional regulatory compliance while also providing for cost reduction and improved straight through processing across the industry.
Specific services under development include Initial margin calculation, reconciliation and disputes management. These services will be introduced throughout 2015 or at least, according to AcadiaSoft, “well before” the 1 September 2016 regulatory deadline.
“In coming months, we will continue to engage with our Working Groups and other major stakeholders to further enhance the solution we have developed with their input,” Walsh added.
“We believe that MarginSphere 2 can ultimately form the basis for an industry utility that can create an even more efficient and risk-managed OTC derivatives market.”
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