Driving change: Real time clearing

Addressing new challenges

Earlier this spring Cinnober revealed its new offering, TRADExpress RealTime Clearing. Built on vast experience, Cinnober now addresses key clearing issues in the post-credit crisis trading landscape. This innovative offering has its background in several driving forces with great impact on the exchange and clearinghouse sector.

First, the credit crisis has sparked ongoing debate about the need for new regulatory measures. It is becoming clear that an integral part of the response will be a requirement for enhanced and flexible clearing and risk management technology.

Then there is the ever increasing influence of high velocity, high frequency algorithmic trading. Such speed and sophistication, however, bring with them increased risk and a new level of demand for high performance, real-time clearing and risk management solutions.

The new service also responds to increasing competition in the market for the provision of clearing services. New entrants and current providers alike will need to respond quickly and flexibly in order to develop their business and launch new services of their own.

TRADExpress RealTime Clearing addresses these new challenges and is geared up for delivery during 2009. It covers a range of services for the clearing organization as well as for its members to make post-trade management an efficient and secure process – from trade execution to settlement.

Trading platform performance applied to the clearing process

A key strength in Cinnober’s new offering is the ability to calculate risk and margin in real time, pre-trade if desired, so that a continuous up-to-the-second picture of a member’s positions can be seen at any given moment.

Inbuilt flexibility allows providers of clearing services to swiftly extend their offering with additional products: cash or derivatives, OTC or listed, of any asset class without further development work. It can utilize any leading risk-related algorithms and uses standard protocols, such as FIX and SWIFT, to facilitate cost-effective integration.

The demands on trading platforms have increased significantly in recent years, driven by accelerating competition. Speed, high throughput, sophisticated functionality, future-proof technology and cost effectiveness have become vital factors for marketplaces. The same factors are expected to be critical also for the clearing segment in the post-credit crisis trading landscape.