Cassini Systems (Cassini), the only front-to-back margin and collateral solution provider for derivatives market participants, has announced its collateral optimization module has seen a 250% uptick in client inquiries globally a clear indication market players are looking for efficiencies in high-interest rate markets. This significant surge in demand for advanced collateral optimization tools results from a perfect storm of macro trends for buy-side companies. These firms are tackling significant increases in their cost of trading due to regulatory margin requirements, the increased cost of collateral from rising interest rates, and volatility and inflation-straining available collateral pools.
In the past three months alone, Cassini has seen a remarkable adoption of its collateral optimization tools within buy-side operations, with clients reporting average time savings of 40% per day per full-time employee for collateral and funding desk teams in collateral selection through automation. Notably, a major pension fund identified an annual revenue increase of $1.25 million across their funds by adopting Cassini’s holistic optimizer to identify high-demand assets instead of the traditional waterfall approach.
Cassini’s collateral optimization analytics enables clients to leverage the power of intelligent algorithms to select the optimal assets to meet margin liabilities while seamlessly being integrated with the tools and workflows firms are already accustomed to.
These analytics can replace outdated, widely-used methods such as the “waterfall” approach or spreadsheet tools, which are no longer sufficient. The module ensures optimal assets are selected to meet margin requirements either during the daily margin call workflow, as part of a pre-trade collateral sufficiency check on a new trade, or during a weekly optimization run that substitutes existing pledged collateral with a less costly option.
The module’s key benefits include:
- Cost Reduction: reduced funding costs of collateral, decreasing the cost of trading bilateral OTC, cleared OTC and ETDs.
- Time saved through automation and flexibility of tools: one client saved over 4 hours a day by replacing a manual collateral selection and optimization process.
Liam Huxley, founder and CEO of Cassini Systems: “Leading firms recognize that collateral tools go beyond regulatory compliance – optimization analytics are essential in mitigating the impact of margin and liquidity requirements during times of extended volatility. Our clients are already reporting substantial savings, including one client saving $1m in just one month thanks to reduced funding costs from optimizing efficiently across additional asset classes. The future of adequate collateral and liquidity management, and staying ahead of the curve, hinges on having the right analytics tools, and Cassini is here to provide them.”
Collateral optimization is a vital component of a broader industry trend focused on liquidity management within the buy-side sector. Cassini offers intelligent analytics to firms looking to build an operational framework beyond regulatory mandates, allowing companies to use tools like collateral optimization, margin analytics, and stress testing features to ensure collateral and liquidity buffers in high-volatility environments.
