Veronica Augustsson, Cinnober
B3 (the Brazilian exchange and clearinghouse) has launched equities, corporate bonds, and equities lending markets on its new multi-asset clearing platform. The clearing solution is delivered by Cinnober, built on its TRADExpress RealTime Clearing system.
The migration of the equities clearinghouse was the target for phase two of B3's Post-Trade Integration Project that will consolidate B3's originally four clearinghouses into one integrated entity (managing equities, derivatives, government and corporate debt securities and FX). Derivatives and OTC products were the first to launch on the new platform in phase one.
With the new integrated clearinghouse, B3 aims to manage risk more efficiently. By analyzing the risk on entire portfolios, the clearinghouse can compensate if an investor has opposite positions in the same underlying asset across product groups and markets. When financial and commodity derivatives, along with OTC products, migrated to the new clearinghouse in phase one, the total systemic benefit in terms of margin release amounted to around BRL 20 billion.
The estimated effect from Monday's launch of phase two is BRL 21 billion of collateral that was returned to the market with complete preservation of the clearinghouse's safety system.
Other features available to market participants from consolidating operating processes, rules, and settlement windows in the merged infrastructure include lower operational costs, cash management optimization, and improved capacity.
"This is a great milestone in a globally pioneering project," says Veronica Augustsson, CEO of Cinnober. "We're proud to have this monumental role in B3's post-trade integration project, bringing so much value to the market. Our real-time, multi-asset technology builds safer markets where the participants are kept informed of risk and margin requirements throughout the day. This gives markets that are more efficient, enabling less collateral to be tied up from investors."