In this video from FIA IDX, Cinnober’s Chairman of the Board, Nils-Robert Persson, takes us through recent developments in clearing and what the next steps ought to be.
Persson first highlights a key shift for clearinghouses: the moment they started to clear OTC derivatives. Before that shift, clearinghouses developed their own systems — CME had SPAN, the OCC had TIMS, etc. To Persson, that was all well and good. The systems were tailored for the institutions deploying them. But when it came to OTC derivatives, clearinghouses went shopping for systems from big banks.
“That’s a real problem in fact because banks are risk takers and clearinghouses and CCPs are managing risk,” Persson said.
Looking ahead, Persson said that collateral management efficiency is the next challenge since it currently is the “bottleneck” for market participants.
“All the time consuming processes we have must be taken away. It’s not okay that payment takes two days. It’s not okay that collateral will be released next Friday,” Persson said. “Collateral should be released in the next minute if I have too much.”