Managing risk in the forthcoming BME Clearing Equity Segment (Spain) - the SLIB’s solution

As part of a substantial reform of the Spanish capital markets, the local clearing house – BME Clearing – will introduce a new CCP segment for equities. The Equities CCP is slated to begin operations on October the 6th, 2015.

Some of our Customers have expressed interest in having the BME Equities CCP integrated in SLIB CRMS. We have included support of the Spanish CCP in the latest version of our system (5.4), which is currently being tested with pilot clients.

Integration of a new CCP is usually a daunting task. The testing stage often brings to light gaps and ambiguities in the CCP documentation, and the challenge is to uncover such problems early enough and to adapt the implementation quickly. Fortunately, SLIB can leverage our extensive experience with other European CCPs, and provide our Customers with a reliable system in a timely manner.

SLIB’s solution for BME Clearing relies on a faithful replication of the CCP risk methodology, margin formulas and modalities. Notably, SLIB CRMS includes further value-added risk management features that extend or complement the CCP system. In particular, our system provides support of internal client accounts – important in the Spanish market – as well as risk monitoring and discretionary intraday client margining. Naturally, the new CCP will benefit from all the functionality of SLIB CRMS framework, as implemented for other markets.

Moreover, SLIB proposes a number of optional features that can be developed and/or activated on request, including pro-active risk management: pre-clearing acceptance/refusal of OTC trades, risk-based take-up automation (for internal clients), and support of the kill button function.

SLIB CRMS Customers can also use the system for simulations, e.g. new client on-boarding, testing the impact of alternative account setup, or for stress testing.

Integration of BME Clearing extends the number of CCPs supported in SLIB CRMS.