StanChart in cross-asset margining first

SINGAPORE - Standard Chartered has become the first dealer to roll out cross-asset margining capabilities publicly, as it expands its private-banking business.

The tool is part of the Spectrum Private Banking solution developed for StanChart by Financial Software Systems (FSS) over 15 months. It manages StanChart's collateralised cross-product trading business, marking the first deployment of a real-time, cross-product margining solution in the private-banking sector.

The system is implemented at StanChart's trading centres in London, Singapore and Hong Kong, and accessible from any of the bank's branches on a 24/5 basis.

Collateralised positions can be taken in foreign exchange spot, forwards, swaps and options, equity, bond, equity option, bond option and money-market contracts with real-time collateral and credit monitoring. The range of tradable FX options covers vanilla, single and double barriers, single and double digitals, and accumulators.

"For example, if you have a high-wealth individual that wants to execute a strategy that includes multiple types of assets, he can do that on margin and we'll calculate his margin and limit requirements in real-time both pre- and post-trade," said Tim Bock, chief financial officer at FSS in Harsham, Pennsylvania.

Spectrum Private Banking went live at StanChart on July 20, following a 60-day user-acceptance testing programme. Bock said FSS is in the process of licensing the cross-asset margining feature to existing client London Capital Group.

He said despite this interest, there is still resistance from prime brokers and broker-dealers to implement the tool because of the siloed nature of the business lines.

Spectrum contains technologies for managing credit and collateral relationships, and for managing, monitoring and reporting client trading activities. It uses a middle-tier calculation engine to establish clients' limits and/or collateral requirements, and makes possible real-time limits and collateral checks. Its data distribution service, meanwhile, connects the data engine to position-management tools.

London Capital could not be reached.