The European Commission has awarded Swedish software provider Cinnober a €2.5 million (£1.93m) contract to develop a clearing system for European and international banks.
The real-time risk margining and multi-asset client clearing system will use Cinnober’s TradExpress real-time processing technology to provide banks and their customers with an “immediate and complete” view of risk exposure across markets. Cinnober provides technology to a number of exchanges and clearing houses globally, including the London Metal Exchange’s recently launched LME Clear platform.
The EC contract is part of the governing body’s ‘Horizon 2020’ SME Instruments project, which will provide grants of up to €2.5 million to finance innovative technology projects. Seventy-eight small business have been selected so far, out of 580 proposals.
The aim of the clearing house investment is to reduce the cost of banks’ capital requirements by more efficient utilisation across business units asset classes.
A formal approval of the grant will be signed in four weeks.
“It is encouraging to have won this support from the Commission in very hard competition,” said Veronica Augustsson, CEO of Cinnober.
“A multi-asset client clearing solution, with real-time risk margining is a disruptive change from today’s silo model with dedicated systems for different asset classes, and batch-approach to margining.
"The results are great efficiency wins, better risk awareness and an ability to offer enhanced services, much needed in a time of massive regulatory pressure on banks’ client clearing units.”