Aug 2015, Hong Kong
FinIQ signed its third client for its cross asset collateral module. The Hong Kong based bank will deploy the FinIQ system to monitor exposure from its treasury and capital markets business. Variety of cash, derivatives and structured trades are pooled from trading systems via online connections and batch imports to keep the exposures in sync with client's trading activities. Similarly saving accounts, term deposit, shares, bonds and notes balances are pooled to update the collateral balances.
Each collateral and exposure is rated according to its risk via a multi-layer multiplier matrix that evaluates the collateral sufficiency every few hours. Large trades especially structured trades are booked in simulation mode and only upon sufficient collateral confirmation are allowed to be traded in the main trading system.
FinIQ workflow manager allows definition of roles, responsibilities and queues for various functions and is completely re-configurable.
Individual collateral and exposure objects are modeled using the FinIQ UCP (User Configured Products) framework, which means any new instrument either a collateral or exposure can be entirely set from scratch without any software changes. It further allows rule based field by field mapping with trade objects originating from external systems meaning no software change even for the interface message formatting.
The post trade events such as barrier touches, redemption, fixings, expiry, notional accumulations, settlements are synchronized well between the trading system and the credit system, hence reflecting the true value of the exposure during its mid life. Both collateral and exposure are revalued periodically using current market rates, amendments and cancellation reflected as they happen.
Timely margin calls, optimized use of collateral, increased amount of netting will and most importantly diversity of instruments supported will make the business more efficient.