State Street and Cassini partner on collateral analytics and optimization

State Street Corporation (NYSE:STT) announced today it has added market leading pre-and post-trade optimization and margin analytics capabilities to its Collateral+ service. In partnership with Cassini Systems, the leading provider of pre- and post-trade margin and collateral analytics for derivatives market participants, Collateral+ now offers an integrated, modular approach to optimization, which addresses collateral efficiency from multiple angles.

First, it integrates collateral and funding impact into the front-office decision strategy ahead of the trades being placed. Through the addition of Cassini’s technology, Collateral+ can optimize margin and carry cost impact, providing the best trade route by identifying all possible ways to execute and clear the trade and highlighting the lowest cost. Collateral+ can also offer margin optimization as a post-trade utility with tools such as novation and compression to lower margin and funding requirements.

Another module provides true collateral inventory optimization based on clients’ collateral funding costs in combination with costs such as clearing fees. This optimization highlights the optimal placement of collateral and the lowest transaction cost routes. Through the bank’s liquidity offerings, including Sponsored Repo and the newly launched Peer-to-Peer Repo, clients can leverage incremental cash and optimized securities revenues in order to effectively execute and grow their investments.

“As an industry, we have a long-held ambition to deliver collateral impacts and trade opportunities to the decision makers in the front office. Our work with Cassini to develop Collateral+ to provide the intelligence and pre-trade knowledge to the desk is enabling State Street to deliver on this,” said Sam Edwards, head of Collateral+ in APAC for State Street. “We are evolving with our clients and developing end-to-end tools and liquidity products in order to allow our partners to focus on their core strengths.”

Today’s announcement builds on the momentum of State Street’s Collateral+ business, as the platform recently became operational with Acadia’s Initial Margin Exposure Manager (IMEM) and DTCC’s Margin Transit Utility (MTU), which simplifies the transfer of collateral among market participants and allows clients to more easily comply with Uncleared Margin Rules (UMR) guidelines.

Cassini Systems CEO Liam Huxley said: “We are excited to partner with State Street on further enhancing the Collateral+ offering with optimization capabilities and analytics that can bring its clients substantial cost savings and a true understanding of front-to-back costs across the entire lifecycle of a trade. The ability to apply these analytics to the Initial Margin requirements of UMR is a powerful way to identify optimal counterparties and manage thresholds strategically with each and every trading decision.”

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