Centralise, connect, automate and optimize

David White, Chief Commercial Officer Cloud Margin

How does your technology empower collateral and ops teams to run more efficiently, cut costs, and reduce risks?

Our platform helps all firms on the sell-side, buy- side and even asset servicers do four main things: centralise, connect, automate and optimise their collateral management. These pillars build off each other, meaning firms looking to get the most out of their collateral programme should first centralise all processes and data, then connect to other players in the ecosystem across the workflow based on their operating nuance, automate across that workflow to achieve STP, and then perform robust optimisation techniques to achieve the most efficient use of their collateral.

Our technology facilitates this is in a number of different ways. CloudMargin enables firms to bring in any type of asset into the platform and apply a fully automated common workflow. We provide connections to a full spectrum of best-in-breed fintechs, tri-party agents, custodians and market data sources and we have an extensive range of APIs for firms to connect to their own up- and down-stream systems.

We also have a built-in optimisation engine and connectivity to an algorithmic optimisation partner, as well as an optimisation API that allows for more flexibility – something we have focused hard on.

Our robust reporting suite is also a huge advantage and differentiator for us, with the flexibility to allow clients to create, build, format, build logic into, and then schedule and distribute reports via any format and any channel to any location.

They can also give teams direct real-time access via logins to dashboards specifically created for given functions. For example, a credit risk dashboard can highlight collateral shortfalls across red-list clients, concentration analytics on held collateral and a real time view of collateral in transit.

All these aspects help firms save costs, reduce risk and use collateral more efficiently across the organisation.

How does on-premise total cost of ownership analysis compare to the cloud?

Work with prospects has given us a detailed breakdown of all of the costs involved in running operations. We looked at those costs over a 10-year period and compared them to our costs and what we noticed immediately was the number of different costs involved in a vendor on-premise and an in-house solution.

First of all, for the former a firm has to pay an annual vendor licence fee. On top of this are a maintenance fee, user fees and vendor professional services fees. If they need to get something out of the system that requires bespoke work, the vendor will charge for it.

In addition, firms have to host the solution on internal servers and provide security and IT support for the local installed version of that software, alongside all the other applications that are either feeding data into that system or receiving that data.

Firms must also release patches on the version of the software they are running. These need to be deployed, tested and released, all of which further increases total costs.

Conservatively, the sum total of these costs for either an on-premise or in-house solution is over twice the price of our solution on a yearly basis. We work hard to give people an understanding of how much they can save and how much more efficient they can be. Keep in mind that as a single-instance solution, our clients get instantaneous benefits of all upgrades simultaneously without incurring extra cost.

What is your typical client profile?

If you looked at our subscriber base you would see a proportional representation of the different segments of the derivatives market including corporates, hedge funds, large and small asset managers, small banks and regional banks, as well as asset servicers and tier one global investment banks.

All these clients can leverage our deployment model and the automation we can deliver. Some will place a greater importance on optimisation - if they have a diverse range of collateral they can use across the agreements they are collateralising on they will see more value there, whereas those just collateralising with cash may be more interested in the data insights and light-touch process we deliver.

This article is part of the Collateral in 2022 Guide, and if you want to find more click here to download the guide.