January 04, 2011

CME Group is using the Calypso System to support OTC derivatives processing for clearing interest rate swaps, the technology company announced today.

The Calypso platform is one of the components of CME’s new offering that allows members to clear OTC derivatives trading. CME Group launched its OTC interest-rate swaps clearing solution on Oct. 18, 2010.

CME Group has also implemented the Calypso system’s limits functionality, which enables the clearing members to control and manage intra-day risk. In today’s announcement, Michael O’Connell, managing director CME Clearing Solutions, commented, “We looked at a number of third-party solutions in the market, seeking out a partner that had deep expertise in the OTC derivatives markets. It was essential that the provider was one who could demonstrate an understanding of what we wanted to accomplish and a vision of how to realize our goals. Calypso’s support of our interest-rate swap clearing solution enables us to continue to bring safety and soundness to the market.” Citing the current regulatory initiatives designed to improve financial stability, Charles Marston, CEO of Calypso Technology, predicted in the same release, “We are going to see a fundamental shift in the OTC derivatives market toward the clearing of standardized OTC derivatives on exchanges. The establishment of CME Clearing’s new offering is an integral part of this evolution,” added Charles Marston. “Our work with CME Group is a testament to our central role in this new era of OTC derivatives trading.”

According to the release, Calypso has also launched a solution for clearing member firms that provides automated trade connectivity with the clearinghouse, workflow management, reconciliation of a member’s positions with the clearinghouse, OTC derivatives, valuation, as well credit risk and collateral management to improve straight through processing.

Ivy is Editor-at-Large for Advanced Trading and Wall Street & Technology. Ivy is responsible for writing in-depth feature articles, daily blogs and news articles with a focus on automated trading in ...