Buy-side firms involved in OTC markets must manage their collateral and margin calls in the new highly regulated environment. It is no longer enough to rely on spreadsheets or in-house databases as this is a complex business. Large traders and banks can use one of the large software packages, but this is not a viable option for corporate treasury departments. New low cost alternatives are coming to market.

CloudMargin

CloudMargin was formed last year by a group of professional with many years experience in collateral management, OTC derivatives and capital market technology. The new low cost cloud based solution has been available for 12 months+ and has been designed to:

• manage your CSAs (including initial onboarding)
• calculate margin cells
• validate collateral eligibility
• manage inventory
• propose and instruct optimised collateral movements
• provide full reporting.

How it works

On joining CloudMargin the client’s collateral agreements (e.g. ISDA CSA, a GMRA for repo, MSFTA, reinsurance agreements, etc.) plus the counter-party details are input to CM either by the client or CM’s onboarding team, see figure:

Source & Copyright©2014 - CloudMargin

Each day, clients securely upload their portfolio of derivatives and available inventory (if they want to make use of non-cash collateral) to CM which then proactively calculates the calls and highlights what needs to be re-issued, the number of calls/recalls expected from the counter-parties and where no action is required. Real-time reporting is available to give the day’s funding predictions.

A range of other support services are provided, as well as end-of-day reporting.

Charges and Try&Buy option

The charges scale with volume, starting at 3-4 agreements and payment is normally monthly.

CloudMargin offer a ‘try & buy’ option where clients can cancel any time during the 30 days after the go-live date without obligation.

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CTMfile take: Collateral is being demanded for an increasing number of derivates and other instruments. CloudMargin is the first low cost, cloud based, easy to use comprehensive solution to managing the corporate treasury’s collateral. We can expect other similar services to come to market in the coming months.