BGC Brokers' Capitalab Successfully Launches Initial Margin Optimisation In Rates Space
19 Oct, 2017, 15:58 BST
LONDON, Oct. 19, 2017 /PRNewswire/ -- Capitalab, a division of BGC Brokers L.P. ("BGC Brokers"), an entity within BGC Partners, Inc. group of companies (NASDAQ: BGCP) today announced that its Initial Margin Optimisation ("IMO") service has successfully executed its first production cycle, reducing Interest Rates Delta, Vega and Curvature counterparty risks simultaneously across Euro, US Dollar, Sterling and Japanese Yen currencies, reducing bilateral initial margin and controlling cleared initial margin at the central counterparty.
Capitalab's IMO service efficiency stems from both including new cleared swaps and options with longer dated expiries resultant from being especially aware of participants' Credit Support Annex ("CSA") effects. "We are excited about this new milestone for Capitalab and are leveraging our expertise in the Interest Rates Options space to deliver a new solution to the industry. With this service, we are reducing counterparty risks and bilateral initial margin in a smooth and efficient manner, using both swaptions and cleared swaps," said David Bachelier, Singapore-based co-founder of Capitalab.
Capitalab's IMO service is designed to allow participants to reduce their bilateral initial margin, following the enforcement of new Uncleared Margin Rules, in place since September 2016. These rules have led to important developments in the industry, both technically and legally, with the replacement of large numbers of CSAs between major market participants.
Contrary to many other types of margin collateral, initial margin ("IM") posted by market participants to each other cannot be re-hypothecated, resulting in a cost of funding. Capitalab addresses this by helping to reduce counterparty risks and hence IM between participants.
"Our Interest Rates solution has demonstrated scalability, thanks to our fully automated (STP) process, which is also designed to handle SEF requirements," said Gavin Jackson, Capitalab London-based co-founder.
"The OTC derivative market is becoming increasingly complex requiring participants to juggle capital and funding metrics. We welcome innovative ideas that address these metrics that can easily be integrated within the firm's current STP processes," said Ken Henriques, Director, Citi Global Markets Counterparty Portfolio Optimisation.
"Capitalab's solution will further help dealers reduce counterparty risk efficiently and with relative ease thanks to its integrated STP process. The results of the pilot cycles performed so far are positive and we are looking forward to see the service expanding from here," said Boyd Winston, Head of Macro Compression Operations at J.P. Morgan.
About Capitalab
Capitalab, a division of BGC Brokers L.P., provides compression services that are designed to bring greater capital and operational efficiency to the global derivatives market. It assists clients in managing the growing cost of holding derivatives, while helping them to meet their regulatory mandates. Through the Swaptioniser® service for portfolio compression of Interest Rate Swaptions, Interest Rate Swaps, Caps and Floors and FX Options, Capitalab looks to simplify the complexities of managing large quantities of derivatives to promote sustainable growth and lower systemic risk and to improve resiliency in the industry. The Capitalab brand is part of FENICS's fully electronic family of brands. BGC Brokers L.P. is authorised and regulated by the UK Financial Conduct Authority and is based in London.
About BGC Partners, Inc.
BGC Partners is a leading global brokerage company servicing the financial and real estate markets. BGC owns GFI Group Inc., a leading intermediary and provider of trading technologies and support services to the global OTC and listed markets. The Company's Financial Services offerings include fixed income securities, interest rate swaps, foreign exchange, equities, equity derivatives, credit derivatives, commodities, futures, insurance brokerage, and structured products. BGC provides a wide range of services, including trade execution, broker-dealer services, clearing, trade compression, post trade, information, and other services to a broad range of financial and non-financial institutions. Through brands including FENICS, BGC Trader, Capitalab, Lucera, and FENICS Market Data, BGC offers financial technology solutions, market data, and analytics related to numerous financial instruments and markets.
Real Estate Services are offered through brands including Newmark Knight Frank, Newmark Cornish & Carey, Berkeley Point, ARA, Computerized Facility Integration, Newmark Knight Frank Valuation & Advisory, and Excess Space. Under these names and others, the Company provides a wide range of commercial real estate services, including leasing and corporate advisory, investment sales and financial services, consulting, project and development management, property and facilities management, the origination and sale of multifamily loans through government-sponsored and government-funded loan programs, as well as the servicing of commercial real estate loans, including those it originates.
BGC's customers include many of the world's largest banks, broker-dealers, investment banks, trading firms, hedge funds, governments, corporations, property owners, real estate developers, and investment firms. BGC's common stock trades on the NASDAQ Global Select Market under the ticker symbol (NASDAQ: BGCP). BGC also has an outstanding bond issuance of Senior Notes due June 15, 2042, which trade on the New York Stock Exchange under the symbol (NYSE: BGCA). BGC Partners is led by Chairman and Chief Executive Officer Howard W. Lutnick. For more information, please visit http://www.bgcpartners.com. You can also follow the Company at https://twitter.com/bgcpartners and/or https://www.linkedin.com/company/bgc-partners.
BGC, BGC Trader, GFI, FENICS, FENICS.COM, Besso, Sunrise, Capitalab, Swaptioniser, ColleX, Newmark, Grubb & Ellis, Berkeley Point, ARA, Computerized Facility Integration, Landauer, Lucera, Excess Space, Excess Space Retail Services, and Grubb are trademarks/service marks, and/or registered trademarks/service marks of BGC Partners, Inc. and/or its affiliates. Knight Frank is a service mark of Knight Frank (Nominees) Limited.
Discussion of Forward-Looking Statements by BGC Partners
Statements in this documents regarding BGC that are not historical facts are "forward-looking statements" that involve risks and uncertainties. Except as required by law, BGC undertakes no obligation to release any revisions to any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see BGC's Securities and Exchange Commission filings, including, but not limited to, the risk factors set forth in our public filings, including our most recent Form 10-K and any updates to such risk factors contained in subsequent Form 10-Q or Form 8-K filings.
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