LONDON / NEW YORK / SYDNEY / SINGAPORE, 7 December 2023 – In the second half of 2023, Cassini, the only company to provide front-to-back margin and collateral optimization for derivatives, has witnessed a pronounced shift in client priorities towards collateral cost management and the strategic allocation of available assets for collateral utilization. This emerging trend underscores the impact of the evolving high-interest rate environment, compelling derivatives users to reevaluate their asset portfolios and reassess fees associated with third-party collateral management.
This transformation is poised to extend well into 2024. Cassini firmly believes the global spotlight will remain on inflation and interest rate markets, anticipating sustained volatility, irrespective of impending rate hikes or reductions.
Liam Huxley, Founder, and CEO of Cassini, reflects on the market dynamics of 2023, stating: “While 2023 has seen relative stability in terms of volatility, it has posed significant challenges to global economic growth, primarily due to the prevailing high inflation and elevated interest rates. For our clients, this has translated into higher margin requirements and an escalated cost associated with securing their collateral. Evidently, this surge in costs resulting from the elevated interest rates is, at the very least, a medium-term trend, necessitating proactive management by buy-side firms to safeguard portfolio performance from any potential drag.”
From a wider market perspective, regulatory statements about the importance of centralized and transparent margin requirements, mandatory clearing, stress testing of margin, and the exploration of margin optimization through cross-margin arrangements are set to persist.
Huxley remarks: “Whether it is the Bank of England issuing directives regarding stress testing in the aftermath of the LDI crises, DTCC and CME enhancing their cross-margining offerings for treasuries or the SEC’s proposal for centralized clearing of repo, it’s evident that the industry’s unwavering attention on margin-related matters will endure in the years ahead.”
The heightened funding pressures have undeniably highlighted the expenses associated with derivatives trading and underscored the critical significance of an efficient margin and collateral management process throughout the entire trade lifecycle. Consequently, it is anticipated that organizations will increasingly prioritize technology solutions designed to yield cost savings in both margin and collateral management, ultimately enhancing liquidity management capabilities.
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Editorial contacts:
John Norris / Alice Jiga
Moonlight IQ
Email: cassini@moonlightiq.com
Tel: +44 (0) 20 7250 4770
About Cassini:
Cassini is the margin and collateral analytics provider for users of derivatives, offering advanced visibility and control over margin, liquidity, and collateral costs across the trade lifecycle. Since 2014, Cassini has been a leading innovator and developer in the margin and collateral analytics industry. Our award-winning analytics have become essential for asset management firms, hedge funds, pension funds, commodity trading companies, clearing brokers, and prime brokers.
We are unique in combining advanced algorithms with intelligence-driven analytics to provide derivative users improved returns, reduced operational risk, and fast margin calculations on any cleared or uncleared derivatives asset. Cassini enables visibility and control over margin, liquidity, and collateral costs and is able to analyze margin exposure, and maximize margin efficiency across the whole trade lifecycle.
Cassini’s services are designed to enhance portfolio returns at every point in the daily business cycle. Our tools empower traders and portfolio managers to instantly analyze a transaction’s all-in, lifetime cost in the pre-trade stage. Our solutions go beyond mere analytics; they offer a partnership that enables clients to intelligently navigate and optimize margin and collateral management complexities with unparalleled precision.
Renowned for our commitment to excellence and innovation, Cassini was named Best Analytics Solution to Address Capital Requirements/Liquidity Risk in the RegTech Insight Awards 2023 and one of the Most Influential FinTech Firms of 2023. As we evolve, Cassini remains dedicated to providing clients with intelligent solutions that differentiate us from traditional legacy systems.
For more information, visit cassini.com
