Leading Global Banks Cut Counterparty Risk as AcadiaSoft and Quantile Pilot Risk Optimisation Service
- Risk Management , Infrastructure
- 10.02.2017 07:30 am
Following the announcement of their partnership in November 2016, Quantile Technologies Limited and AcadiaSoft Inc. have successfully completed their first large-scale risk reduction pilot exercises.
Participants, including Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Nomura, Royal Bank of Scotland, Standard Chartered, and UBS achieved material reductions in initial margin requirements as a result of the exercises, scheduled over recent weeks. By leveraging the existing AcadiaSoft infrastructure and standardized data set, users were able to optimise their portfolios without needing to provide additional data.
The initial margin requirements for banks trading OTC derivatives are determined via the AcadiaSoft Hub using the ISDA SIMM model. The integration of Quantile’s risk optimisation technology into the Hub reduces risks between market participants by delivering optimised portfolio rebalancing strategies as an integral part of the margin process. The result is more efficient capital management and optimised initial margin requirements.
“Quantile’s platform delivers both counterparty risk reduction and the release of valuable bank economic resources,” said Stephen O’Connor, Chairman of Quantile. “Lower resource consumption at banks reduces costs for end users and improves market liquidity. The combination of AcadiaSoft’s market-leading margin infrastructure and Quantile’s advanced optimisation technology has created a powerful platform that will deliver much-needed efficiencies to the market.”
“Launching optimisation as an integral part of the AcadiaSoft Hub allows our clients to operate under the new margin regulations in the most operationally and capital efficient way possible,” said Chris Walsh, CEO of AcadiaSoft. “Exposures can now be optimised as a seamless, systemic part of the margin infrastructure fundamentally improving how risk is managed across the industry. The recent pilots were an important step and we look forward to scaling up activities over the coming weeks and months”