Effective risk management has become a source of differentiation for Central Clearing Counterparties (CCP’s) rather than merely a compliance requirement, and our Razor™ solution enables customers to differentiate themselves by offering the following risk management capability:
Real-time Margin Calculation
Razor™ provides real time margin calculation so risks are measured as they occur, and intraday risk decisions and margin calls can be made quickly in stressed and volatile markets to protect the clearing house and its members.
Sophisticated and configurable Risk Methodologies
Razor™ supports a choice of risk methodologies:
- For initial margin ranging from more straight forward add-on and scenario based approaches, through to SPAN and more sophisticated VaR approaches (including Historical, Filtered Historical, Bootstrap Historical, Monte-Carlo) , Liquidity Risk or Stress Testing methodologies.
- For risk management – Market Risk VaR, sensitivity analysis, stress testing, liquidity and credit risk modelling
Accurate initial and variation margin calculation
Razor™ enables accurate and transparent calculation of initial and variation margins, critical for both the clearing house and its participants. Pproven analytics and drill-down capabilities within Razor™ provide the clearing house and participants with full transparency to the transaction level of all trading activity and the associated margin requirements.
Automated workflow, limit and excess management
The Razor™ workflow and limit management capability enables exchanges and CCP’s to lower fixed costs through a risk management infrastructure that can fully automate the business processes and scale as trading volumes fluctuate.
Provide risk analytics directly to participants as a value added service
The Razor Risk ‘Software as a Service’ technology provides the opportunity for CCP’s to offer their internal risk analytics directly to participants as a value-added service. The technology provided by Razor Risk, enables participants to directly access their portfolios, validate margin calculations and perform “What-if” analyses to evaluate the effect of new trading strategies on their margin requirements.
Compliance with the International Organization of Securities Commission’s (IOSCO) recommendations for CCP’s is increasingly a differentiating factor as investors choose more carefully where to trade. The move away from bilateral, un-collateralised arrangements and the push by regulators to move these transactions to CCP’s and fully collateralised under SIMM methodologies, makes technical solutions a necessity rather than a “nice to have”. Razor Risk fully complies with IOSCO’s risk management recommendations and the SIMM methodology for fully collateralised “uncleared” trading.
Razor Risk delivers results via screen layouts, con gured for each user’s speci c requirements. Limits and excesses are easily pinpointed using a typical RAG system. Results are available for printing, exporting and further analysis in third party applications such as Excel.