BM&FBOVESPA Signs Contract For New Clearing System

BM&FBOVESPA Signs Contract For New Clearing System

BM&FBOVESPA signed an exclusive contract with Swedish technology company Cinnober on October 21, 2011 for the perpetual licensing of TRADExpress RealTime Clearing. This is a state-of-the-art, flexible multimarket clearing system with real time data processing and risk calculation capacities.

“TRADExpress RealTime Clearing will be an important instrument for accelerating and enhancing the integration project for the Exchange’s four clearinghouses – securities, derivatives, FX, and equities. One of the important features of this project is the CORE (Close-out Risk Evaluation) system, which will permit risk netting between different classes of assets and contracts, granting users of the Exchange’s clearing systems greater efficiency in the allocation of capital," said Cícero Vieira Neto, Chief Operating, Clearing and Depository Officer.

“This is the most comprehensive clearing project in the world to date, and I’ve been in this industry since the 80s. We’re of course extremely proud to have been chosen by BM&FBOVESPA for this task,” said Nils-Robert Persson, Executive Chairman of Cinnober. “Brazil is a forerunner in our industry in many ways. While looking for improvements, the European Union is looking deeply into Brazilian regulation, so to be appointed as BM&FBOVESPA’s technical partner for this clearing project is one of the most important steps we’ve taken as a company.”

According to the contract with Cinnober, BM&FBOVESPA will have operational autonomy as regards the TRADExpress RealTime Clearing system. In this manner, in the future it will also be able to market the new clearing platform with strategic partners.

Between the end of 2010 and the start of 2011, BM&FBOVESPA developed a proof of concept test for Cinnober’s TRADExpress RealTime Clearing system, at its data processing center in Brazil. Some of the main items that were assessed and tested were flexibility in the adaptation and standardization of: different participant structures (clearing member, brokerage house, qualified customer etc); different classes of assets and contracts (equities, futures, forward contracts, options, government securities, fixed income corporate securities, spot foreign exchange etc); and settlement models.

Some other requirements that were considered important were: the capacity to process a large volume of trades and information and to calculate risk in real time.

The development of the project related to the integration and modernization of BM&FBOVESPA’s clearinghouses will continue to be developed in 2012, with integrated market testing throughout and the start of implementation expected for 2013.