Cinnober targets specialised risk management for CCPs

Tech firm has developed a solution it says will provide CCPs with more suitable risk management tools.

Cinnober has launched a risk management offering specifically designed to help central counterparties (CCPs) deal with key post-crisis regulation including Basel II, EMIR and Dodd-Frank.

The firms said CCPs have been left having to work with risk management systems intended for banks which are not suitable for many of the needs specific to CCPs.

Nils-Robert Persson, chairman of the board at Cinnober, said: “The requirements on CCP’s risk management has become more complex. We’ve built a solution that meets extreme criteria on speed and functionality – facilitating compliance with regulatory obligations, realisation of business development opportunities and competitive services while never compromising risk management.”

The system, called TRADExpress CCP Risk, is set to be implemented by the Japan Exchange Group during 2018 as part of a new risk solution across equities, bonds, futures, options, CDS and IRS.

CCPs using the product will be able to run multiple risk models in parallel with a plugin framework for valuation and risk measure algorithms to enable CCPs to rapidly test and introduce new risk models as required.

“CCPs need to avoid overburdening market participants with excessive margin requirements without becoming a systemic risk to the financial industry,” said Mikael Öhman, chief architect risk solutions at Cinnober. “For this, new methods and procedures that give a full view across all asset classes and instrument types are required, and that’s what we’re introducing with TRADExpress CCP Risk.”

Other key functions including initial margin modelling, credit and liquidity stress testing, market data and risk factor modelling and default fund management.