Within UK retail banks, the treasury function has been challenged by mandatory central clearing obligations for OTC derivatives.
In the context of corporate governance and fiduciary responsibility, treasury managers feel obligated to have robust control around independent verification of the Initial Margin (IM) call on their cleared OTC derivatives portfolio, as they bear potential credit risk to their clearing brokers.
We have been working with a UK retail bank to provide this increasingly critical function. Its team is now in production using OpenGamma’s margin calculation capabilities within our partner CloudMargin’s collateral management workflow solution. Best of all, the client was able to access this new functionality through a simple configuration option in CloudMargin, rather than the often onerous task of new software deployment or updates.
With full visibility into the Initial Margin requirements on their OTC derivatives portfolio, the bank is now able to validate every Clearing Broker IM call against the actual Clearing House IM requirement – ensuring that costs resulting from clearing mandates are precisely understood.
Using the cloud-based solution offered by OpenGamma and CloudMargin, we have helped this bank increase control and transparency, meaning they never have to blindly agree on a margin call again.