Osttra Completes “Record-Breaking” Interest Rate Optimisation Run
Posted by Colin Lambert. Last updated: October 4, 2023
The push for capital efficiency continues with Osttra announcing what it calls a “record-breaking” interest rate counterparty risk optimisation cycle in September.
The firm says the run resulted in a 56% quarterly increase in savings across bilateral and cleared initial margin. It adds that financial institutions are looking to simultaneously optimise initial margin under the uncleared margin rules (UMR), cleared initial margin in multiple CCPs, and capital under the standardised approach for counterparty credit risk (SA-CCR).
Multi-targeted optimisation across the two regulations aligns with the aim of ensuring efficient capital and risk management, cost reduction, all while maintaining a competitive edge in the market, Osttra continues, noting that running together, its clients can optimise on multiple risk factors, simultaneously while also benefiting from compression to minimise gross notional.
“UMR and SA-CCR have triggered a dramatic increase in client focus on optimising using risk-based capital models, as well as on reducing SIMM and CCP IM via our triBalance service,” says Erik Petri, Head of Osttra TriReduce and TriBalance. “Optimising the two in tandem is clearly helping financial institutions to manage their capital more efficiently.
“In addition, as central banks across the globe have tightened interest rate policies to tackle rising inflation, market participants have needed to adjust from a longstanding low-rate market dynamic and optimise their strategies accordingly,” he adds.