Formicary Simplifies Clearing House Membership for OTC Derivatives

Formicary has launched two new clearing solutions: a Central Counterparties (CCP) on-boarding solution to facilitate a smooth on-boarding process for new members of LCH.Clearnet Ltd's SwapClear facility; and a Fire Drill readiness solution for existing members.

Based on Formicary's experience working with LCH.Clearnet and systems integration expertise, the new offerings assist new and existing members to effectively comply with membership requirements.

Using its understanding of SwapClear processes, Formicary eliminates the learning curve faced by in-house teams to develop the necessary connectivity and reconciliation solutions. This significantly reduces the time and cost to comply.

Formicary achieves this by evaluating the key areas around the clearing process within an organization, including novation, payment netting, default management, back-loading of existing trades, valuation assistance, and workflow management.

In addition, technical integration includes extending MarkitWire connectivity, creating trade loader for sample default portfolios, and developing appropriate reconciliation tools to integrate with the clearing house technology infrastructure.

Greville Lucking, Formicary's chief operating officer, says that organizations shouldn't underestimate the complexity of the work needed to integrate their systems with those of a clearing house, pointing out that most companies run a myriad systems accumulated over the years which will have to be adapted in order to be compatible with clearing houses' systems.