clearing Costs
CCP costs originate from a variety of activities and sources. We have alternatives to keep clearing costs down.
CCPs charge for their services in a variety of ways. Costs can include:
- Event based fees such as new trades
- Annual portfolio holding fees
- Lifecycle event fees such as terminations and compression
- Account structure fees
- Margin broken down into various components
- A membership fee for direct members
- Portfolio transfer fees
Cassini offers strategic alternatives to enable CCP costs to be managed and reduced.
With Cassini you can:
Measure IM on your cleared portfolio
Calculate IM on cleared, uncleared, ETD and Prime Broker portfolios
Compress your portfolio into IMM Swaps and Swap Futures
Move trades between FCMs to reduce margin
Optimize the assets posted to a CCP
Reduce IM by porting trades into Clearing
Your cleared portfolio will contain trades which are mandated to clear. The clearing mandate rules are specific and leave out some varieties of OTC trades which can be cleared, even if not mandatory.
Porting trades into clearing only makes sense if the outcome is margin reducing, something our porting service handles intelligently.
With Cassini you can:
Find trades which reduce cleared IM
Find ways to reduce IM by porting trades
Only find IM reducing trade porting scenarios
Understand the before/after impact of porting
switch trades between fcms
Industry good practice is to have multiple FCMs between you and each CCP. This reduces risk is one of your FCMs had operational or structural issues.
At the point of execution you may route trades due to market conditions and pricing, but later the effect of portfolio changes and market conditions may mean the net risk at each FCM could be re-balanced.
With Cassini you can:
Balance IM between multiple FCMs with a single CCP
Reduce IM by porting trades between FCMs
Only find IM reducing trade porting scenarios
Understand the before/after impact of porting
compressing into imm swaps or swap futures
Evolution of the cleared swap market delivered interest rate products which are equivalent to OTC swaps. Eris Futures and MAC Swap Futures are an alternative way to transfer risk.
Both these products are cleared and have beneficial margin requirements:
- Cleared OTC swap IM: 5-day or 7-day VaR
- Cleared Swap Future IM: 2-day VaR
With Cassini you can:
Select the target compression products
See a risk profile and replacement trade portfolio
Analyze cleared or uncleared portfolios
Understand the before/after impact of compression
WANT TO FIND OUT MORE ABOUT managing ccp costs?
See our software in action
See our software in action. Ask for a demo and we can explain how to get going with the Cassini services.
