SGX Partners with Cassini Systems to Help Market Participants Prepare for Uncleared Margin Rules (UMR)
Exchange and Analytics Firm Offer Service for SGX Users to Manage and Comply with UMR
SINGAPORE and LONDON, Aug. 26, 2020 /PRNewswire/ -- Singapore Exchange (SGX), the world's largest and fastest-growing Asian foreign exchange (FX) futures marketplace, and Cassini Systems, the leading provider of pre- and post-trade margin and collateral analytics for derivatives markets, have partnered to provide a free service for SGX market participants, to help them prepare to meet the Uncleared Margin Rules (UMR) requirements. Under the agreement, SGX will leverage Cassini's domain expertise to provide market users with complimentary analyses to determine their average aggregated notional amount (AANA), representing the gross value of open, non-centrally cleared derivatives positions.
International regulators use the AANA to determine whether a firm falls in scope for each phase of UMR, with Phase 5 scheduled to take effect in September 2021. In-scope entities are subject to a mandatory exchange of Initial Margin (IM) with their counterparties for their bilateral over-the-counter (OTC) agreements over the $50 million IM threshold per counterpart. While the consecutive three-month period for officially determining in-scope status for Phase 5 will be in 2021, SGX and Cassini are offering the service in advance so firms potentially meeting the $50 billion AANA threshold can take steps now to assess their status, adjust their positions and look for alternatives to certain non-cleared products.
Firms affected by Phase 5 include banks, asset managers, hedge funds and pension funds. Phase 6, scheduled to take effect in September 2022, has a threshold of $8 billion AANA.
SGX and Cassini will also team up to educate and raise awareness among market participants on the process for complying with UMR, through webinars that will take place in the coming months.
KC Lam, SGX Head of FX and Rates, said: "By September 2022, more than a thousand firms will be impacted by UMR, thus it is important to start planning for it now. Cassini is a natural partner for us in this effort to help our market participants with a best-of-breed solution. Once a SGX market participant provides us with information on its OTC positions, we will work with Cassini to turn around a timely and comprehensive analysis. UMR will inevitably increase the cost burden for many of our clients. SGX's FX Futures (including FlexC FX Futures) that are traded and cleared on exchange was our first solution offered to clients to help them manage UMR. We are now taking a step further by assisting them to take steps to lower their AANA, simply by understanding how they can alter the balance of exchange-traded and non-centrally cleared products within their portfolios."
Liam Huxley, CEO and founder of Cassini, said: "Those firms that conceivably could fall in scope for Phase 5 should immediately begin efforts to understand their AANA and strategize on how they might identify opportunities to re-allocate their portfolio, reduce their margin obligations to potentially achieve substantial cost savings and delay falling in scope while still meeting their trading goals. If they wait until it's time to report the information to the regulator, it's often too late to make these adjustments. We commend SGX for taking this initiative and are delighted to provide our expertise to the exchange and the world's major institutions across the globe that rely on its markets every day."
In April, Cassini announced the establishment of its first physical Asia Pacific presence with the opening of a Sydney office and plans to grow its client base in the region.
Singapore Exchange is Asia's leading and trusted market infrastructure, operating equity, fixed income and derivatives markets to the highest regulatory standards. As Asia's most international, multi-asset exchange, SGX provides listing, trading, clearing, settlement, depository and data services, with about 40% of listed companies and over 80% of listed bonds originating outside of Singapore.
SGX is the world's most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN and offers commodities and currency derivatives products. Headquartered in AAA-rated Singapore, SGX is globally recognised for its risk management and clearing capabilities. For more information, please visit www.sgx.com.
About Cassini Systems
Founded in 2014, Cassini Systems offers an award-winning derivatives margin analytical platform that provides the industry's only front-to-back margin and cost analysis across the entire lifecycle of a trade. Cassini users can calculate any margin on any cleared or uncleared derivatives asset; analyze drivers and movement in margin exposure; reduce Initial Margin levels; and maximize margin efficiency with the firm's industry leading, advanced algorithms. Cassini services have a proven track record of enhancing portfolio returns at every point in the daily business cycle, empowering traders and portfolio managers with the ability to analyze instantly in the pre-trade stage the all-in, lifetime cost of a transaction. Top-tier hedge funds, asset managers and Tier 1 banks rely on Cassini for powerful, flexible, automated tools to manage their portfolios of over-the-counter and exchange-traded derivatives products. For more information, visit www.cassinisystems.com.
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