For the global precious metals marketplace, Autilla Ltd. today announces the selection of TESS Connect & Go from Cinnober Financial Technology as its platform to migrate its precious metals Over-the-Counter (OTC) broking onto a proven electronic trading platform.
“Our intention is to create a modern and flexible solution that meets market demands for functionality, reliability and conformance with current and future compliance and regulatory changes,” says Mike Greenacre, CEO of Autilla. “With the unique electronic platform solution provided by Cinnober, we will be able to offer a choice of bilateral or CCP OTC Bullion settlements with all the benefits of a state-of-the-art IT platform, and at a significantly lower cost than has traditionally been the case.”
The international OTC market for gold, silver, platinum and palladium is centered in London, with wholesale bullion banks trading millions of ounces of precious metals daily. These OTC transactions rely on bilateral credit agreements, which are costly and expose the banks to counterparty credit risk and increasing balance sheet cost. Dodd-Frank in the U.S. and impending European EMIR & MiFID regulations will increasingly require electronically traded, centrally cleared and daily monitored transactions.
The majority of interbank transactions currently pass through traditional voice brokers. New requirements for transparency on pre- and post-trade price discovery and trading are pushing the market towards an electronic solution.
“There’s still someone at the end of the line if needed, but price discovery and trading will be clear and transparent, protecting our clients and the integrity of the marketplace,” adds Greenacre.
London-based Autilla specializes in options and derivative hedging instruments on physical metals, coal and iron ore, metal mine finance and off-take. With its new electronic platform Autilla will be able to provide banks with a fungible technology-based solution to regulatory requirements. The platform will be an Organized Trade Facility (OTF) solution, providing a European regulatory based service, solving compliance, trade and price reporting, as well as balance sheet issues and client requirements.
“The groundbreaking shift we are witnessing in the OTC markets towards electronic trading is both anticipated and increasingly in demand, not least with regard to current and pending regulatory demands,” says Niki Beattie, a London-based markets strategist and adviser specializing in global financial infrastructure. “Markets are alert to reform and innovation, so the services that Autilla plans to launch represent the right move at the right time for a global actor in this sector.”
The TESS Connect & Go solution from Cinnober enables trading venues to set up a regulation-compliant market and provides access to state-of-the-art marketplace technology that is fully compliant, in a full-service concept. This means a low-risk investment, superior total cost of ownership and ability to focus fully on core business. It’s an agile solution that can be used for a wide variety of asset classes and is easily adapted to most types of specialized marketplaces.
“We are very pleased that Autilla chose our TESS Connect & Go solution,” comments Cinnober’s CEO Veronica Augustsson. “This is the start of an extremely interesting journey, where Autilla stands for an innovative move to capture the opportunity presented by markets undergoing regulatory change. This evolving landscape means lower entry barriers and a larger role for technology, which is exactly where Cinnober adds value.”