Massive margin savings for market participants, improved risk control with real-time calculations, and more cost-efficient operations. These are just a few of the benefits resulting from BM&FBOVESPA’s pioneering post-trade integration project. With its sights set on strengthening the competitiveness of Brazil’s financial markets, BM&FBOVESPA decided to integrate its four clearinghouses into one entity, running on a single high-performance, multi-asset, real-time clearing system from Cinnober.

1. A Cinnober customer case
BM&FBOVESPA post-trade
integration project

2. “Launching the first phase has been a massive
success. I have customers contacting me,
thanking the exchange for lowering their
collateral requirement up to 90%
depending on the nature
of the portfolio.”
Cícero Augusto Vieira Neto,
COO, BM&FBOVESPA

3. Strengthening the
competitiveness of
Brazil’s financial
markets
Massive margin savings:
USD 8.8 billion of freed up
collateral in phase 1
Improved risk control with
real-time calculations
More cost-efficient
operations

4. Background: struggling with an
infrastructure of separate silos
A legacy from 2008 merger of BM&F and Bovespa into
BM&FBOVESPA

5. A unified infrastructure
BM&FBOVESPA is creating a more efficient infrastructure to
enhance competitiveness while strengthening security

6. BM&FBOVESPA’s vision put entirely
new demands on the technology
Calculate risk in real time…
…across all asset classes
Support ambitious growth plan for the next
20 years
Capacity to handle very large amounts of
transactions and accounts

7. BM&FBOVESPA thoroughly researched
potential system suppliers
Two vendors were invited to conduct
a proof of concept
A comprehensive selection process

8. ”After the proof of concept Cinnober stood
out as the natural supplier in this extremely
challenging project.
They were very result oriented and had the
right attitude, demonstrating excellent
project management skills and the best
product architecture and performance,
aligned with BM&FBOVESPA’s expectations.”
Rodrigo Nardoni, Managing Director—
Post-Trade Systems Development,
BM&FBOVESPA

9. The solution—based on TRADExpress™
RealTime Clearing
Multi-asset solution for OTC and exchange-
traded instruments
Plugin architecture for risk models and instruments
BM&FBOVESPA’s Close Out Risk Evaluation CORE
a plugin
Portfolio margining in real time

10. Other solution highlights
More efficient use of capital
Single settlement window and multilateral netting
Straight-through processing of key activities
Trade allocation, give-up, position management,
clearing & settlement
Capability to calculate real-time estimates of risk for
more than 50,000 investor portfolios with
positions in derivatives

11. Other solution highlights
Offers a risk simulation environment in which members can
simulate what-if scenarios
Stress and back testing can be performed ad hoc at
any time of the day
Applies the final beneficial owner clearing model—highly
robust in terms of risk management and fraud prevention

12. Technical highlights
Capacity to handle over 10 million transactions
a day…
…across more than 12 million accounts
Scalable architecture supporting growth
Highly resilient solution with no single point
of failure

13. The project Ambitious
project
System integration was
1 of 14sub-projects
High
complexity
level
Merging 4 existing
clearinghouses into 1
Phased
rollout
Derivatives first
market to go live
Early
insight
with agile
method
Frequent, testable
deliverables
BM&FBOVESPA
involved
hands-on
Developers based at
Cinnober for a few
months at a time

14. ”Cinnober was without doubt our best choice.
Together we have pioneered real-time clearing
in the post-trade industry, something many
deemed impossible.
We have an extremely good cooperation with
equally focused teams and I am very proud of
what we have achieved so far”
Viviane Basso, Managing Director
—Clearing and Settlement, BM&FBOVESPA

15. Key outcomes
USD 8.8 BN margin savings
Unified settlement processes estimated to generate
daily savings of USD 220 M
Process standardization and automation will cut
recurring costs and reduce operating risks
New volume records reached after launch with all
processes executing with 100% reliability

16. ”Launching the first phase has been a massive
success. We have customers contacting us,
thanking the exchange for lowering their
collateral requirement up to 90% depending on
the nature of the portfolio.
Both the exchange and our clients are informed
about the risk in real time, which creates
confidence and much more efficient operations.”
Cícero Augusto Vieira Neto,
COO, BM&FBOVESPA

17. Further info
More on slideshare:
Real-time clearing – a short history
of a pioneering innovation
http://www.slideshare.net/Cinnober/real-timeclearing
Download pdf:
Clearinghouse integration
revolutionizes Brazil’s
financial markets
Contact
sales@cinnober.com