Sheehan: The market has been faced with recent pressures to comply with new regulations and cope with squeezed margins. Many firms have turned to technology to reduce costs and support business innovation. Some agile financial institutions have seized the opportunities the changing regulatory landscape has provided and have looked for a technology partner that can help to transform their business model and seek new revenue opportunities.

Alberta Investment Management Corporation (AIMCo) is one of Canada’s largest and most diversified institutional investment managers with more than $90 billion of assets under management. AIMCo selected Calypso Technology as its partner to simplify and consolidate its collateral management across separate portfolios and business units while also introducing a transparent structure for the optimal use of collateral.

Michael Baker, senior vice president of investment operations at AIMCo: Although we were facing the market under a single name, the management of collateral was decentralised and we were relying on multiple platforms and spreadsheets to monitor, calculate, communicate and process collateral for different strategies. This has been simplified with the implementation of Calypso’s Collateral Management module.

As the same counterparties were used across our internal entities, we realised that there was a more agile way of optimising the pool of collateral available but this would require a centralised view of inventory. We needed a new, centralised system architecture to provide the exposure and available collateral from each unit to our collateral management group while maintaining and displaying the owners of both.

We had a vision of a consolidated system that could give us a simple and transparent view across all funds, allowing us to optimise the use of collateral, seek new revenue streams and improve profit margins.

We selected the Calypso Collateral Management solution and worked in partnership with Calypso Technology to create a transparent portfolio lookthrough where it would be possible to allocate the exposure back to the eligible pools. In addition, the Calypso system offered the possibility to optimise the allocation of fund assets to external counterparties, including the use of rehypothecated collateral with the ability to track the source and destination of the collateral.

The Calypso system allows us to assign a value to the collateral depending on the various demands from different markets we operate in, and enables us to seek new revenue opportunities. The Calypso solution has provided us with a powerful centralised, real-time inventory management view which truly reflects our business model.

Sheehan: This is an example where we have worked in close partnership with a customer to deliver functionality to support its business transformation. This has been a benefit to AIMCo, Calypso and other clients as enhancements are made to our core Calypso product and shared across our client base.

Corinne Grillet, chief customer officer at Calypso Technology: Take the example of BNP Paribas Securities Services, which has a distinguished track record for providing premier client service and operational excellence. We are pleased to be trusted to support its end-to-end post-trade processing services with the Calypso integrated front-to-back architecture.

Amor Chebira, COO of market and financing services at BNP Paribas Securities Services: With the Calypso solution, we have been able to consolidate our securities lending and repo activities resulting in significantly improved collateral management capabilities.

Sophie Marnhier-Foy, principal product manager at Calypso Technology: In the past, margin requirements have significantly increased, with the implementation of the Basel Committee on Banking Supervision-International Organization of Securities Commissions margin requirements for non-centrally cleared derivatives, and the expansion of clearing mandates. Once the phased implementation has been completed, most derivative trades will be subject to initial margin, creating substantive costs in terms of collateral requirements.

Calypso Margin not only offers a tool for compliance with the new regulations, but also a solution to optimise the collateral and reduce the total cost of the trade. With Calypso what-if margin simulation, the cheapest trading venue can be selected, based on ISDA SIMM and major CCP OTC margin methodologies. Calypso Margin also offers post-trade margin calculation and decomposition reports, in order to validate and analyse the margin costs.

Sheehan: The BCBS-IOSCO regulation has been a big driver for us to ensure necessary tools were integrated as part of our standard framework. As an ISDA-licensed vendor, Calypso provides the ability to both calculate the initial margin requirement using ISDA SIMM methodology and process the initial margin using the Collateral Management solution, adhering to regulatory concentration limits, eligibility, wrong way risk and segregation.

Our tier-one clients have had to comply with the initial margin requirements since their introduction in September 2016. This should comfort our wider client base, which will be affected by the phased implementation of the initial margin rules, knowing that the system offers full support. In fact, some of our buy-side clients will comply with the initial margin rules earlier than the actual regulatory deadline to benefit economically from preferential pricing offered by their brokers.

As of March 2017, everyone had to comply with variation margin regulation. Calypso clients have been able to advance their business knowing that their system offers full support for both the initial margin and the variation margin regulations.

Sheehan: All our developments are aimed at further enhancing the user experience, making Calypso easier to implement and to reduce the total cost of ownership.

The cloud deployment is an example of this. The Calypso Cloud solution further standardises the system for a quick time-to-market and reduced costs in terms of maintenance, upgrades, implementation, hardware and support. This is an attractive option, especially for our buy-side clients and medium-sized or smaller banks.

Data is a general concern in the industry—how to access it in real time and how to make most use of it. At Calypso, we are constantly working on improving our real-time dashboards and central views of inventory to provide full transparency for easy decision making.

Looking ahead, we are also analysing blockchain technologies, where we have a partnership with the R3 Consortium.

Grillet: We are proud to have a substantial client base and equally pleased to see it being so diverse, ranging from clearinghouses/CCPs, to large investment banks, asset management firms, pension funds and increasingly, hedge funds. In fact, nine CCPs rely on Calypso Technology, clearly demonstrating our leading vendor position in this segment that is characterised by rather complex requirements.

The diverse usage of Calypso demonstrates the depth and breadth of the functionality, as well as our close ties to all market sectors. We need to anticipate and respond to how new regulation is affecting different client segments across the globe.

In terms of our own roadmap, we always take on board feedback from our clients, along with discussions with regulators, as key drivers when choosing our directions for development. With more than 200 customers across our services and more than 55 live on our collateral product alone, we get a lot of useful feedback. We actively promote discussion with our clients, as well as between different customers themselves, through client conferences such as this, and by facilitating smaller user group meetings.