The U.S. Dodd-Frank Wall Street Reform & Consumer Protection Act and the European Market Infrastructure Regulations (EMIR) rules introduced significant challenges around OTC derivatives clearing that institutions need to understand, adapt to and incorporate into their existing business models to remain compliant and competitive in this fast moving market. To navigate efficiently through the complexity of these challenges requires niche clearing expertise and knowledge.
As a LCH.Clearnet SwapClear Regional EMEA Certified Partner and a System Integrators with a proven track record of working with CCP clearing houses, existing and aspiring clearing members, including buy-side clients, Formicary’s experience of delivering OTC clearing projects places us in a unique position to be able to help institutions that are looking to achieve success in clearing and reduce the time and cost to comply with the latest regulatory requirements.
Regardless of which stage of clearing you are at, or the type of clearing services you provide, Formicary can offer a complete or tailored package to help your business become more effective in the clearing space.
Direct Clearing Members
DMP Fire Drill – business and technical health check and recommendations
Internal default management processes and in particular the DMP Fire Drill process is often overlooked by existing members. CCP membership requires each and every member to remain ready to manage a default at all times including scheduled Fire Drills. Formicary can design an efficient and integrated default management process to your existing BAU workflow to establish a process that doesn’t require unnecessary effort and resources at every Fire Drill or in the event of a real default.
Clearing process ‘Health Check’ – STP design / automation
Regulatory developments such as real time registration in the clearing sphere have resulted in system workarounds and manual tasks to manage new CCP workflows, increasing the requirement for manual intervention and risk of error. Our health check can identify these areas of concern and provide members with a plan for automating and streamlining these tasks and providing a real cost benefit for our clients. Additionally, post default trade management for an auction winner is not a process that is considered business as usual and manually managing such an event exposes the winner to a significant amount of risk during turbulent market conditions. Formicary has a wealth of knowledge in this respect and is able to provide compliant process design solutions.
Whether Dodd-Frank, EMIR or both requires your institution or clients to be compliant, Formicary can provide an analysis of your obligations and make recommendations of how or where this data is managed. This is particularly beneficial when reporting is required across multiple asset classes and your firm uses multiple systems.
Client Clearing Providers
Formicary is experienced in assisting clearing members with the development of client clearing services under both the FCM and SCM models. We have an extensive knowledge base regarding the regulatory treatment of either model, collateral management and default management distinctions, and the internal operational and trade representation differences between agency and principal trades.
If you are a direct clearing member looking to improve upon a dated or tactical clearing implementation, or if you are looking to widen your offering to include client clearing services, contact us.
New Direct Clearing Member Candidates
Our detailed knowledge of the end-to-end clearing process – trade workflows, collateral management, margining, default management, reporting and reconciliation – coupled with our expertise in the Murex and Calypso trading platforms and surrounding integration technologies, allows us to use our detailed expertise to streamline the planning and development process, deliver project goals on time and on budget and bring existing IT and Operations staff up to speed.
If you are looking to become a direct SwapClear member, Formicary, through our experience, is in a unique position to help you navigate the onboarding requirements in a cost efficient, professional and timely manner.
Our services include:
• New member onboarding process – business and technical design and implementation
• DMP and DMP Fire Drill – business and technical design and implementation of an efficient and repeatable process
• Assist and facilitate Driving Test and DMP Fire Drill
• System integration to CCP / affirmation platforms
• Workflow design – efficient STP of clearing workflow to reduce the risk, burden and cost of manual processes
• Regulatory reporting and reconciliation
• Collateral management and segregation
• Interface design and build for both ClearLink API and MarkitWire connectivity
• Project management, business analysis, implementation and testing of client clearing functionality
• Accounting and attribution of coupons, fees, VM, PAI and IM
If you would like to know more about how Formicary can assist you in the implementation of your direct clearing program, contact us.
Formicary has been working with LCH.Clearnet SwapClear since the Lehman Brothers default in 2008 as a system integrator and supplier of technical and business consultancy. We have a broad and deep understanding of clearing house’ business processes, interfaces, operations, valuation and risk, reporting and collateral management. Our experience includes:
• Migration and reconciliation of large trade volumes between new and old trading/clearing systems
• Design and implementation MarkitWire interfaces
• Design, co-ordinate and manage the default management process
• Development of collateral management portal for clearing members
• Assisted in the design and implementation of ClearLink API for FCM, SCM, and SEF connectivity
• Redevelop an award winning margin approximation tool’s pricing libraries and tools
As integration partners for Calypso and Murex, our expertise in the CCP development sphere has been forged at the front line. Combined with our knowledge and experience of the surrounding integration technologies, Formicary is uniquely positioned to assist clearing houses in providing quality and competent services to their members.
If you would like to know more about our offering to clearing houses, contact us.