OSTTRA completes record interest rate counterparty risk optimization cycle
“UMR and SA-CCR have triggered a dramatic increase in client focus on optimising using risk-based capital models, as well as on reducing SIMM and CCP IM via our triBalance service. Optimizing the two in tandem is clearly helping financial institutions to manage their capital more efficiently.”
In an unprecedented financial move, OSTTRA, a leading post-trade firm, reported the completion of a groundbreaking interest rate counterparty risk optimization cycle last month. This landmark cycle saw a noteworthy 56% quarterly uptick in savings across both bilateral and cleared initial margins.
This comes at a pivotal juncture when the financial world is grappling with the implications of the uncleared margin rules (UMR) and the standardized approach for counterparty credit risk (SA-CCR).
Addressing uncleared margin rules (UMR) and counterparty credit risk (SA-CCR)
Both regulations have led financial institutions to re-evaluate their strategies, seeking to optimize initial margins and capital in line with these new mandates. The objective? To streamline capital and risk management, curtail costs, and ensure a competitive foothold in the rapidly evolving financial landscape.
OSTTRA’s approach to tackling these challenges is multi-pronged. It allows its clients to simultaneously optimize on various risk factors, thereby capitalizing on compression opportunities to reduce gross notional.
Erik Petri, Head of OSTTRA triReduce & triBalance, said: “UMR and SA-CCR have triggered a dramatic increase in client focus on optimising using risk-based capital models, as well as on reducing SIMM and CCP IM via our triBalance service. Optimizing the two in tandem is clearly helping financial institutions to manage their capital more efficiently. In addition, as central banks across the globe have tightened interest rate policies to tackle rising inflation, market participants have needed to adjust from a longstanding low-rate market dynamic and optimise their strategies accordingly.”
Founded on the stalwarts of MarkitSERV, Traiana, TriOptima, and RESETt, OSTTRA stands at the crossroads of post-trade solutions. The firm amalgamates processes, networks, and expertise to navigate the intricate maze of post-trade challenges that global financial markets pose. In doing so, OSTTRA not only reinforces the post-trade ecosystem but also ushers in innovative solutions with unparalleled connectivity.