Real-time clearing - A short history of a pioneering innovation

Real-time clearing A short history of

a pioneering innovation

Why?

Massive developments in trading drove the need for a radically

new approach to clearing and risk management

Two significant historical trends

(1) The OTC derivatives markets got increasingly complex and lacked transparency

The collapse of Lehman Brothers in October 2008

(2) High frequency trading gained ground during the 2000s and brought new types of risk

The flash crash on May 6, 2010

In 2008 – after Lehman – Cinnober took the strategic decision to build the world’s first real-time clearing system. “Mission impossible” was what many thought.

Cinnober’s vision

Limitations of legacy clearing systems Batch processing of risk

Couldn’t cope with accel-erating trading speed

Instrument-specific Inefficient and costly infrastructures with silos

Risk-model specific Insufficient for a rapidly changing world

Static Complex to add new products, functions & clients

Bring clearing up to speed with trading Real-time processing

Calculate risk for each new order and trade – instantly

Instrument & asset class agnostic Allow cross-asset clearing

Risk-centric Multiple risk models for different purposes

Flexible & extensible Support aggressive business development

A market in trouble

Strategy: leverage a proven layered architecture To inherit features from robust technical platform for high-volume marketplaces

Performance

Reliability

Scalability

Extensibility

Just one year later, in 2009, TRADExpress™ RealTime Clearing was launched

A pioneering real-time solution equipped to handle radically growing demands on clearing institutions and their increasingly complex risk management

The full force

Rich quality

• Real-time processing • Leading capacity • Flexibility & extensibility • Reliability

Rich functionality

• Cross-asset clearing • OTC & exchange-

traded contracts • Risk-centric

DUBAI GOLD & COMMODITIES EXCHANGE

BM&FBOVESPA

MARKITSERV

LME CLEAR

JOHANNESBURG STOCK EXCHANGE

5 sites operating or under implementation

BM&FBOVESPA

Migrating four separate clearing houses into a single entity, using a single platform Strengthening robustness of risk management process Allocating capital more efficiently for clients Handling over 10 million end-client accounts and a steady load of thousands of transactions per second Shortening time-to-market for new products and services Read more

Dubai Gold & Commodities Exchange

Integrating trading, clearing and surveillance Real-time risk management, also pre-trade for commodities and FX derivatives Efficient collateral utilization More accurate handling of credit risk Rapid product development Supporting aggressive growth plans Read more

The Johannesburg Stock Exchange

Replacing multiple separate clearing systems with a single integrated solution Processing equities, commodities, derivatives, fixed income and FX in a single clearing system Supporting strategy for growth Managing risk exposure and quantitative analysis flexibly Read more

LME Clear

The London Metal Exchange is launching a brand new clearing house, migrating from LCH.Clearnet Taking more control of its infrastructure & improving end-to-end processing across the LME value chain Using multiple risk models Faster product development Better client service Read more

MarkitSERV Credit Centre

Offering clearing certainty in a fragmented trading and clearing landscape Centralized pre-trade credit checks Connecting trading counterparties, execution venues, FCMs and clearing houses Giving buy-side users control over their credit lines and allowing SEFs to check credit in milliseconds before orders are posted Read more

An ongoing success story Cinnober is pioneering the post-trade

industry with cross-asset real-time clearing technology, and revolutionizing risk

management.

The customer track record speaks volumes.

To learn more

Get in touch: cinnober.com/contact cinnober.com

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