Four of the world’s largest investment banks —Deutsche Bank, Goldman Sachs, HSBC and J.P. Morgan—are now live on AcadiaSoft’s MarginSphere, a recently launched online community for margin automation in the OTC derivatives market.
The four banks had previously participated in the MarginSphere pilot program and all are now fully in production, according to AcadiaSoft which said it expects to announce additional banks going live on the solution soon, as well as other industry participants such as administrators, hedge funds and mutual funds.
MarginSphere is a margin confirmation community where counterparties engaged in collateral management electronically confirm margin calls, helping to reduce inefficiencies and manage risk in an automated fashion, according to the company. AcadiaSoft developed MarginSphere in close coordination with a number of the industry’s leading banks, as well as with ISDA (International Swap Dealers Association), to ensure that specific needs from both a functionality and regulatory standpoint were addressed in the solution.
“As the industry has evolved in recent years and new regulatory requirements have been put forth, it has become more crucial than ever for firms to shore up and bring more efficiency and transparency to their collateral management operations,” explained Craig Welch, co-founder and CEO of AcadiaSoft in today’s release. “Our firm and the development of MarginSphere in particular, is a direct result of this need. By working in close collaboration with the industry, we are able to deliver a service that directly fulfills the need for firms to manage collateral and counterparty risk in a more automated and efficient fashion. We’re excited about MarginSphere going live with some of the top banks in the industry today, and are even more excited at the prospects that lie ahead.”
Using MarginSphere, dealers and investors are able to manage all aspects of collateral communications online, giving parties involved in managing a collateral agreement access to the same information instantaneously. Users may view their collateral exposures and commitments and make adjustments as needed. All activity is time stamped, and a full audit trail of activity is created, satisfying existing regulatory requirements. The new service significantly improves the process by reducing operational risk and by dramatically increasing transparency, according to AcadiaSoft’s release. Having a centralized location from which to track and manage margin calls helps avoid costly and time-consuming errors while also helping to achieve STP, the release stated.