Cassini integrates with IHS Markit's thinkFolio

Cassini Systems is partnering with IHS Markit to offer a margin solution within thinkFolio, IHS Markit’s integrated investment management platform, saying it stands out from other Uncleared Margin Rules (UMR) and standard initial margin model (SIMM) solutions because it offers complete coverage across all asset types.

“The thinkFolio integration with Cassini is not just a UMR/SIMM solution,” Liam Huxley (pictured), the London-based company's CEO and founder, told Global Investor on Thursday. “This integration is about providing full pre-trade analysis of trade execution to thinkFolio users, whether it is for swaps cleared on central counterparty clearing houses (CCPs) or uncleared swaps that fall under UMR.

“In terms of UMR, almost all other firms offering solutions are purely offering end-of-day IM calculation and reconciliation. Cassini also supports that, but has a much broader solution set that offers IM calculation and optimisation across the trade life-cycle, from pre-trade, through intra-day monitoring, to the end-of-day calculation.

“In essence it analyses the lifetime cost of a trade before you execute the trade; we call it LCA, lifetime cost analysis.”

Huxley said the approaching final phases of UMR, along with Covid-related uncertainty and volatility, have significantly increased both the number and the size of margin calls on all types of portfolios, for both initial and variation margin. This has created stress for many firms due to the large amounts of extra collateral they require, in some cases forcing them to liquidate positions.

As a result, a need has arisen for ways to understand margin drivers and for tools that reduce margin and collateral needs.

According to Huxley, integration with thinkFolio allows firms to understand the margin impact of trades at CCPs and reduce post-trade costs by identifying the most cost-efficient counterparty, clearing broker or CCP.

Brett Schechterman, managing director and global head of thinkFolio at IHS Markit, said the integration with Cassini would ensure transparency of margin and collateral costs.

Cassini in April said it planned further expansion in the Asia Pacific region after opening an office in Sydney.

Huxley said last year that the added €50 billion threshold for the phasing-in of uncleared margin rules has given an incentive for the buy-side to compress their over-the-counter portfolios.