BM&F Bovespa, the domestic Brazilian exchange group, has selected Sweden-based technology vendor Cinnober to overhaul its clearing system as it seeks greater post-trade integration between its market segments.
The project will result in the replacement of BM&F Bovespa’s four clearing houses used for equities, derivatives, government bonds and spot FX with new multi-asset capabilities based on Cinnober’s TRADExpress RealTime Clearing system. Implementation of the new clearing system is expected to start in 2013.
The new solution will incorporate a multi-asset and multi-market risk management framework that will use multiple simultaneous risk methodologies in real time. It will also include collateral management and netting capabilities as well as settlement instructions based on asset class.
Cinnober said its system is able to run several risk algorithms in parallel, enabling optimal risk control with thorough stress testing, and the use of different algorithms for different instrument classes.
“TRADExpress RealTime Clearing will be an important instrument for the integration and modernisation of our post-trade environments,” commented Edemir Pinto, CEO at BM&F Bovespa.
“Legacy clearing systems are clearly not able to match the flexibility and functionality required in a modern marketplace, so other actors are sure to follow this Brazilian initiative,” added Nils-Robert Persson, executive chairman of Cinnober.