Tokyo Stock Exchange and Japan Securities Clearing Corporation Select Calypso for CDS Clearing Service
Calypso Technology Inc., a global application software provider of an integrated trading, risk and processing platform to financial institutions and corporate treasuries, announced October 26 that Tokyo Stock Exchange Group (TSE), Asia’s largest exchange, has selected Calypso Technology to provide the platform for its new credit default swap (CDS) clearing service to be provided by Japan Securities Clearing Corporation (JSCC). Clearing CDS on the iTraxx Japan Index, the Calypso product will manage the lifecycle of the new clearing service for OTC CDS, as the TSE and JSCC address the market need for central counterparty clearing in Japan.
Responding to the financial crisis and the resulting global demand for risk reduction, improved transparency and operational efficiencies particularly in the OTC market, TSE and JSCC collaborated to develop a central clearing function for CDS in Japan. “Throughout the crisis, we saw increased demand from our clients for enhanced risk management capabilities and back office processing services such as settlement and payments,” comments Kei Miyazato, Head of IT Business Department, TSE. “Providing central counterparty clearing for CDS and CDS index in Japan is a much required service. Our vision is to provide a proficient, advanced market standard solution that would achieve the goal of reducing counterparty risk. In addition to Calypso Technology’s experience in successfully implementing central clearing services at other global exchanges, the firm’s market perspective and their industry know-how are important to our program.”
Leveraging the Calypso product’s configurable workflow and out-of-the-box functionality to achieve straight-through-processing, TSE will use the system throughout the full lifecycle of OTC CDS clearing: limits checking, trade matching, confirmation, messaging, margining, netting and settlement. “Calypso Technology’s ability to provide a flexible, purpose-built solution to clearing houses, while fully integrating with trade and confirmation platforms across multiple product lines, has made Japanese CDS central clearing service a reality,” comments Akio Yamashita, Head of Operation Planning, JSCC
TSE and JSCC also identified several key aspects of the Calypso platform which would deliver added value to the central clearing service. The Calypso platform offers interfaces with external trade infrastructure systems such as Mark-IT and DTCC. Furthermore, the firm can leverage the system’s award-winning back-office and comprehensive functionality, including historical VaR, cash positions, reporting, Credit Event Processing and Trade Lifecycle Processing.
Charles Marston, Chairman & CEO, Calypso Technology, comments, “This joint work between a respected and instrumental exchange and forward-looking securities clearing organization further emphasizes our applied expertise in OTC derivatives central clearing and the significant in-roads we have made in APAC. Through our work with TSE and other global exchanges, we continue to facilitate central clearing services to financial markets around the world. We are delighted to be selected by TSE and look forward to working with them as this historical landmark project progresses.”