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CME Group Uses Calypso Technology’s Solution for Central Counterparty Clearing of OTC Derivatives

Calypso Technology Inc, a global application software provider of an integrated trading, risk and processing platform to financial institutions and corporate treasuries, today announced that the CME Group is using the Calypso System to support OTC derivatives processing for clearing interest rate swaps.

On Oct 18th, 2010, the CME Group launched its OTC interest-rate swaps clearing solution. The Calypso Platform is one of the components of the CME Group’s new offering that allows members to clear OTC derivatives trades. CME Group has also implemented the Calypso system’s limits functionality, which enables the clearing members to control and manage intra-day risk.

Michael O’Connell, Managing Director CME Clearing Solutions, comments, “We looked at a number of third-party solutions in the market, seeking out a partner that had deep expertise in the OTC derivatives markets. It was essential that the provider was one who could demonstrate an understanding of what we wanted to accomplish and a vision of how to realize our goals. Calypso’s support of our interest rate swap clearing solution enables us to continue to bring safety and soundness to the market.”

“Given the current regulatory initiatives designed to improve financial stability, we are going to see a fundamental shift in the OTC derivatives market toward the clearing of standardized OTC derivatives on exchanges. The establishment of CME Clearing’s new offering is an integral part of this evolution,” comments Charles Marston, CEO of Calypso Technology. “Our work with CME Group is a testament to our central role in this new era of OTC derivatives trading.”

Calypso Technology has also launched a solution for clearing member firms that facilitates automated trade connectivity with the clearinghouse, workflow management, reconciliation of a member’s positions with the clearinghouse, OTC derivatives valuation, as well as credit risk and collateral management to enhance straight-through-processing. It enables member firms to offer differentiated services to their clients. The Calypso system also replicates clearinghouse margin calculation methodology and performs what-if testing to evaluate the impact of margin on a trade prior to physical clearing.