Buy-Side Technology Awards 2015: Best Buy-Side Collateral Management Tool—CloudMargin

CloudMargin and margin analytics provider, OpenGamma, struck an alliance in October to provide pre-trade insight into central counterparty (CCP) charges for over-the-counter (OTC) derivatives. Neither firm sits inside the walls of a major institution, and yet they’ve both taken great strides in establishing standards for the industry.

Two of the standards that distinguish CloudMargin are its delivery model, and a willingness to approach the old-fashioned business of collateral management with a fresh eye. If one looks at a diagram of the platform’s workflow—inputs and credit agreements coming in; messaging to custodians going out—CloudMargin doesn’t look all that unusual.

But the cloud infrastructure upon which it is built has allowed more buy-side firms, particularly smaller managers, to link into the system more quickly using a menu-based price structure, while simultaneously giving the bigger players more scalability. This would seem an obvious choice in 2015, and it’s a beneficial byproduct of starting from scratch, instead of tolerating retrofitted, often-customized legacy platforms still in use elsewhere.

The second part of the CloudMargin proposition is more technically interesting—especially for a stubborn function like this one that has suffered from archaic manual processing, seemingly forever.

CloudMargin has argued that automated data extraction from ISDA credit support annexes (CSAs) is a key priority going forward; now, it’s putting its money behind that argument. This autumn, it partnered with artificial intelligence (AI) provider RAVN Systems to use the latter’s Applied Cognitive Engine (ACE) for extraction of CSA details. According to Andy Davies, CloudMargin’s CEO, the partnership will leverage “their expertise to solve the significant documentation management problems our clients have.”

Two of the standards that distinguish CloudMargin are its delivery model, and a willingness to approach the old-fashioned business of collateral management with a fresh eye.

It’s an exciting time for the middle office when AI is somehow creeping into collateral management, but CloudMargin’s rise in this market has proven that the need for bolder, buy side-centric thinking is there, and only growing. For its tech-forward approach, CloudMargin is the perfect first-time recipient of this category.