AcadiaSoft Inc., the industry provider of margin automation solutions for counterparties engaged in collateral management worldwide, has announced that London Stock Exchange Group (LSEG) has taken a minority, circa 16%, stake in the company.
Along with this investment, AcadiaSoft has signed a preliminary agreement that will enable further collaboration with LCH SwapAgent on the development of new products to automate and standardize the margin process for non-cleared derivatives. AcadiaSoft and LCH SwapAgent will work together to provide global derivatives market participants with a seamless operational process for margin calculation. LCH SwapAgent would provide its independently calculated collateral information to the AcadiaSoft Hub (The Hub) which would help customers using The Hub to improve processing efficiency and reduce margin disputes.
AcadiaSoft is owned by 13 banks and three major industry infrastructure providers that are all working together towards meeting the automation goals of the industry: NEX Group, The Depository Trust & Clearing Corporation (DTCC), Euroclear, and now LSEG. Global bank investors include BofA Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Societe Generale, State Street and UBS.
Daniel Maguire, Chief Executive Officer, LCH Group and Member of the Executive Committee, LSEG, commented:
The acquisition of a stake in AcadiaSoft underlines our strategy to expand into the non-cleared space, an area in which AcadiaSoft has considerable experience. The non-cleared margin rules continue to impact the dealer and buy-side community, and it is crucial that integrated services are available to support market participants in reducing risk while maximising their capital and operational efficiencies. LCH SwapAgent brings our expertise in managing risk, and operational resilience to the bilateral market and we are delighted to be collaborating with AcadiaSoft to foster further innovation in this market.
Chris Walsh, Chief Executive Officer, AcadiaSoft, added:
We welcome this investment and we’re excited to embark on this new opportunity to collaborate so we can bring more products to LCH SwapAgent and AcadiaSoft’s mutual customer base. We see our services as extremely complementary and look forward to continuing to bring standardisation and simplicity to the non-cleared market.
LCH SwapAgent is a service for the non-cleared derivatives market. It is designed to simplify the processing, margining and settlement of trades without requiring novation to a central counterparty or a change to the underlying trade terms. The service went live processing cross-currency swaps in November 2017, and most recently handled its first Settled-To-Market trade. 15 dealers have signed up to LCH SwapAgent, including: Bank of America Merrill Lynch, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, J.P. Morgan, Morgan Stanley, Nomura and RBS.
LCH SwapAgent will be integrated into the AcadiaSoft Hub with a single interface, dashboard and point of control. Users will be able to leverage their existing messaging processes and technology. AcadiaSoft plans to help extend the use of SwapAgent across the broader market, including buy-side firms. This will serve to expand LCH’s role in bilateral uncleared derivatives, as well as to reduce risk and increase operational efficiency across the industry.