Energy commodities trader, Castleton Commodities International LLC has implemented OpenGamma analytics to optimize its margin requirements.
OpenGamma, a financial technology company specializing in risk management solutions, offers clients access to life-cycle cost analytics, including initial margin, collateral, clearing fees, brokerage and trading costs.
Additionally, CCI’s integration of margin optimisation analytics provides investors with real-time insight into trade execution options, such as optimal clearing venue and clearing broker selections. As a result, CCI clients will be better able to minimize trade costs and prove the best execution.
The collaboration comes in response to European regulations for non-centrally cleared derivatives, such as the uncleared margin rules, which require firms using OTC derivatives to post margin on those transactions.
Castleton Commodities International is the latest major institution to sign up to OpenGamma’s analytics service to manage the uncleared margin rules. In May, it announced a collaboration with London-based analytics provider, IHS Markit, to help mutual clients reduce the cost of margin management.
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“CCI has a long history of pursuing state of the art technology to maximize returns, and the use of OpenGamma to increase our margin efficiency is the latest example of this,” said John Boardman, Global Head of Merchant Operations at CCI.
“We are pleased to be working with CCI, one of the leaders in their field, to increase the capital efficiency of their derivatives trading activity,” added Peter Rippon, CEO at OpenGamma.
To date, OpenGamma secured nine rounds of funding to the tune of $51 million in a bid to better address the increasing demand for its solutions which enable firms to optimize their activities and improve capital efficiency in the OTC markets.
OpenGamma distinguishes itself from other major providers with a software-as-a-service (SaaS) approach which is based on an open-source library of standardized derivatives pricing and risk models. The hosted service provides access to margin analysis with no overhead required for data integration or local software deployment.
In addition, OpenGamma solutions enable investors to compare OTC and ETD margin requirements across multiple CCPs, including LCH, CME and EUREX. The offering rapidly gains traction since the accurate calculation of exposure and the ability to predict future margin cost has become a major consideration for all industry participants.