Vermiculus addresses scalibility issues in clearing with AI-powered system

Rick Steves

With clearinghouses getting increased attention from regulators and the wider public in the aftermath of the r/WallStreetBets phenomenon, Vermiculus announces the launch of an AI-based clearing system that is claimed to respond differently to hotspots.

Vermiculus, a Sweden-based fintech firm serving exchanges and clearinghouses, has announced the launch of an AI-powered, real-time clearing system. The system brings together advances in dynamic microservices architecture with vast experience in clearinghouse business requirements.

Clearinghouses have been at the center stage of the meme stocks craze as retail brokers running b-booking models were asked for larger deposits to cover trading risks on highly volatile stocks such as GameStop Corp (GME) and AMC Entertainment Holdings (AMC). Robinhood was first asked for $3 billion by the NSCC. The figure was later cut down to $700 million after marking the GameStop stocks as positioning closing only.

One can say that Vermiculus has perfect timing as the firm launches its clearing system powered by AI as the trading industry discusses what lessons to learn from all the r/ WallStreetBets rage. Such volatile and insecure times call for an agile clearing operation that responds differently to hotspots. The clearing system at stake addresses the scalability issues by expanding and minimizing the hardware needs with smart algorithms. Its Rhythm Adaptor reduces the effect of peaks by learning from history and considering upcoming events.

Taraneh Derayati, Chief Executive Officer at Vermiculus, commented: “The use of AI applications in the clearing ecosystem is under-utilized. Vermiculus has broken new ground with its clearing system and offers reduced operation cost by balancing hardware usage and finding anomalies in system outputs using pattern-recognition. Furthermore, optimizing risk profile by intelligent collateral placements, cleansing market data by identifying outliers, and suggestions to correct them together with smart portfolio liquidation strategies in default situations are few other examples where the use of AI brings new possibilities. Vermiculus, with its new product suite, is calling for creative use of modern techniques to secure system operations, generate growth and innovation for increasingly complex markets.”

Nils-Robert Persson, Chairman of the board at Vermiculus, said: “Today we are able to create such an advanced clearing system within months while it took several years before. I am delighted to be part of the team that serves the most demanding customers with the latest technology based on microservices and AI.”

Microservices architecture in clearing systems has grown popular within the trading industry as it allows for deployment of single functions such as: margin calculation, trade validation, settlement netting, default management, exposure assessment, or a combination of microservices for a fully-fledged clearing system. It supports cloud, on-premises, and hybrid deployments as well as zero- downtime deployment when adding and upgrading system components independently.

In late 2020, the Financial Stability Board (FSB), which coordinates rules for the G20 group of wealthy nations, said it would “consider during the course of 2021” whether clearing houses should have “pre-funded resources” as buffers. These institutions are vital to ensuring the correct payments reach the right parties, even if a counterparty goes bust.

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