LMRKTS, an industry-leading optimization and compression provider, announced the completion of its third optimization cycle for clients who calculate their capital requirements using the Basel Committee on Banking Supervision’s Standardized Approach for measuring Counterparty Credit Risk (SA-CCR).
Banks face new challenges in post-trade counterparty exposure management as SA-CCR is being implemented globally. In addition to managing the complexity of new netting sets and a new methodology, banks must continue to optimize and mitigate exposures with counterparties still utilizing the Current Exposure Method (CEM). The phased transition risks the bifurcation of optimization networks and creates additional headwinds for banks’ treasury resource management and XVA teams.
Since June 2020, LMRKTS’ solution has enabled clients to optimize against a combined network of both CEM and SA-CCR counterparties in a single cycle. “Our innovative approach to holistically managing both methodologies will not only allow the network to remain intact but also grow as additional regions migrate to the SA-CCR framework,” said Andrea Ianniello, President and Chief Commercial Officer of LMRKTS. “This dual objective service is the most recent example of LMRKTS proactively helping our network adapt to the changing regulatory landscape.”
LMRKTS is a leading optimization and compression provider that uses mathematical optimization to help financial institutions manage risks and regulatory capital costs. LMRKTS contributes to the stability of the financial system by reducing capital, balance sheet, and operational costs for its clients. Since the launch of its first commercial service to reduce risk and leverage exposures in G10 currencies, LMRKTS has gone on to eliminate trillions of dollars of obligations between some of the world’s largest financial institutions. LMRKTS was founded by former traders and technologists who saw an inefficiency in short term risk management and has received investment from The World Bank and Motive Partners.
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