Clearing and trading members benefit from real-time monitoring and management of their risk positions/ Enhanced Risk Solution to significantly improve market safety and integrity
On 15 March 2010, Eurex Clearing successfully launched its new “Enhanced Risk Solution”, an industry-leading real-time risk data distribution service. Europe’s largest clearing house is the first central counterparty worldwide to offer risk management and margining data in real-time to its trading and clearing members. This innovative service further expands Eurex Clearing’s existing state-of-the-art risk management tools. The Enhanced Risk Solution is available across all asset classes and products – including derivatives, cash equities, bonds and repo transactions – for all connected exchanges and trading venues where Eurex Clearing offers clearing services. The new service is free of charge and will allow all members to optimize their intra-day risk monitoring, risk controlling and treasury management towards Eurex Clearing.
“Our Enhanced Risk Solution significantly contributes to the regulators’ and supervisors’ goal of improving market safety and integrity by increasing transparency“, said Thomas Book, member of the Eurex Executive Board and responsible for clearing. “Our customers will directly benefit from increased control over their own risk management and greater efficiency in their collateral management. By offering such a service Eurex Clearing actively contributes to policy makers’ goal of a safe and sound financial market structure.”
The Enhanced Risk Solution is a strategic milestone in Eurex Clearing’s risk management roadmap. With its suite of services, Eurex Clearing responds to industry trends like algorithmic trading and direct market access which dramatically increase the number of transactions and speed of trading. In June 2009, Eurex Clearing migrated its internal risk monitoring to a real-time system that permanently recalculates risk data based on price changes and actual positions. Eurex Clearing’s services also comprise comprehensive pre- and post-trade risk control measures including a stop button. The stop button enables clearing and non-clearing members of Eurex Clearing to delete all orders and quotes of the respective member and prevents further order and quote entry in emergency situations.
The Enhanced Risk Solution distributes risk-relevant margin parameters, position information, overall margin requirements, detailed margin components, cash flows, the value of provided collaterals and the respective margin shortfall or surplus information. This data allows members to perform real-time valuations of all open positions and transactions, thus enabling clearing members to precisely monitor their non-clearing members; non-clearing members will be able to control their own risk exposure accurately.
The new offering is based on open standards to allow customization of the data stream into in-house applications. It is based on the Advanced Message Queuing Protocol (AMQP) for delivering messages and the FIXML*) format for the application layer messages, which follows industry standard.
*) FIXML is the XML vocabulary for creating Financial Information eXchange (FIX) protocol messages.
