FIA Tech announced the launch of FIA Tech’s Cash and Collateral reference data service. At launch, the dataset will be used by several global clearing firms that manage more than $120 billion of collateral held by customers for trading futures in the US alone. That is equivalent to 40% of all customer funds held in US futures accounts, according to Commodity Futures Trading Commission (CFTC) filings and data published by the Futures Industry Association’s FCM Tracker.
Cash and Collateral is a globally collated data set that covers 40 clearinghouses around the world. The data are sourced from FIA Tech’s central counterparty (CCP) partners and available on the Databank Network. The data set offers a standardized, aggregated view of collateral instruments accepted by CCPs and eliminates the manual process of extracting and parsing exchange and CCP information for FCMs and their clients. The service also provides crucial data points such as haircuts, concentration limits and collateral management fees which are essential for collateral and risk management.
Collateral management is one of the leading industry challenges for the derivatives industry. Data collection is very labor intensive and information has historically been presented in multiple rule books, with inconsistent data formats and methodologies across CCPs, and eligible collateral, haircuts and limits changing frequently. FIA Tech’s Cash & Collateral dataset aggregates, standardizes, and normalizes CCP data into a standard repository (Databank), in a machine readable format for seamless integration with FCMs, clients and custodians’ internal systems.
Andrew Castello, head of Reference Data at FIA Tech, said in a statement: “Inefficiencies in data sourcing waste valuable time, effort, and resources. FIA Tech’s newest Cash & Collateral initiative is designed to dramatically reduce manual data collection and significantly improve operational processing. Particularly in times of market volatility and inflation, it is crucial that firms understand and accurately capture CCP acceptable collateral, haircuts, interest rates, and fees to strategically optimize their margin calls.”
Read our interview with Andrew Castello on collateral optimization