B3 transfers equities to its multi-asset clearing platform
Cinnober’s real-time clearing solution now handles post trading process for both the equities and the derivatives markets in Brazil
- BRL 21 billion of collateral returned to the market (approx. USD 6,4 billion)
- Phase two completed of major Post-Trade Integration Project going from two clearinghouses to one for equities and derivatives
- More efficient risk management by analyzing the risk on entire portfolios
B3 (the Brazilian exchange and clearinghouse) successfully launched on Monday the equities, corporate bonds, and equities lending markets on its new multi-asset clearing platform. The clearing solution is delivered by Cinnober, built on its TRADExpress RealTime Clearing system.
The migration of the equities clearinghouse was the target for phase two of B3’s Post-Trade Integration Project that will consolidate B3’s originally four clearinghouses into one integrated entity (managing equities, derivatives, government and corporate debt securities and FX). Derivatives and OTC products were the first to launch on the new platform in phase one.
With the new integrated clearinghouse, B3 manages risk more efficiently. By analyzing the risk on entire portfolios, the clearinghouse can compensate if an investor has opposite positions in the same underlying asset across product groups and markets. When financial and commodity derivatives, along with OTC products, migrated to the new clearinghouse in phase one, the total systemic benefit in terms of margin release amounted to around BRL 20 billion.
The estimated effect from Monday’s launch of phase two is BRL 21 billion of collateral that was returned to the market with complete preservation of the clearinghouse’s safety system.
Other benefits to market participants from consolidating operating processes, rules, and settlement windows in the merged infrastructure include lower operational costs, cash management optimization, and improved capacity.
“With that launch, Brazil’s financial and capital markets are obtaining new levels of operating excellence,” says Cícero Augusto Vieira Neto, Chief Operating Officer of B3. “By integrating the markets in a single clearinghouse, using a real-time clearing solution we’re able to offer more capital efficient post-trade services, improve daily liquidity, and reduce operating costs. With an infrastructure capable of absorbing ever larger volumes, B3 has paved the way for further market growth, and the system’s flexibility lets us respond quickly to the market’s needs.”
B3 currently handles one million transactions per day on average on its exchange, with peaks of up to three million transactions per day. The new clearing platform has initial capacity to manage 10 million transactions per day.
“This is a great milestone in a globally pioneering project,” says Veronica Augustsson, CEO of Cinnober. “We’re proud to have this monumental role in B3’s post-trade integration project, bringing so much value to the market. Our real-time, multi-asset technology builds safer markets where the participants are kept informed of risk and margin requirements throughout the day. This gives markets that are more efficient, enabling less collateral to be tied up from investors.”
TRADExpress RealTime Clearing from Cinnober enables clearinghouses to manage clearing and monitor risk in real time across multiple markets, both OTC and exchange-traded. The solution has proven itself at several high-profile clearinghouses globally — enabling margin and settlement savings for their clients, and offering improved risk management, extreme performance, faster product development capabilities and efficient operations.
Learn more about B3’s new single clearinghouse by visiting http://clearing.com.br/en/#clearing.
For further information or discussion, please contact:
Head of Corporate Communications
Cinnober Financial Technology
Tel. +46-73 403 12 39
B3 Press Office
About Cinnober Financial Technology
Cinnober provides solutions and services to leading trading and clearing venues, including exchanges, clearinghouses, banks and brokers. Cinnober’s solutions are largely based on the TRADExpress™ Platform, incorporating everything needed for mission-critical solutions in terms of performance, robustness and flexibility. The portfolio of offerings includes price discovery and matching, real-time risk management, clearing and settlement, index calculation, data distribution and surveillance. Cinnober’s customers include Australian Securities Exchange, B3 (former BM&FBOVESPA), Dubai Gold & Commodities Exchange, Euronext, Japan Exchange Group, Johannesburg Stock Exchange, the London Metal Exchange, LME Clear, NYSE and the Stock Exchange of Thailand. For additional information, please visit www.cinnober.com
About B3 S.A. – Brasil, Bolsa, Balcão is one of the world’s largest financial market infrastructure providers by market value. The services it offers range from exchange trading, clearing and other post-trade services to registration of over-the-counter (OTC) transactions and of vehicle and real estate loans. B3 was established in March 2017 when the securities, commodities and futures exchange activities of BM&FBOVESPA were combined with the activities of Cetip, a provider of financial services for the organized OTC market.