The Japan Exchange Group is using Cinnober's risk management product as its new risk management solution and expects it will be rolled out later this year. The system is based on a customized module built on Cinnober’s TRADExpress RealTime Clearing platform. It will provide JPX with a mix of cross-asset risk monitoring, sophisticated stress testing, back testing and value at risk assessments.
The risk management system covers JPX’s entire market, including equities, bonds, futures and options. JPX already tapped Cinnober to install its TRADExpress clearing platform for the group’s listed derivatives market, which is operated by the Osaka Exchange and cleared by the Japanese Securities Clearing Corporation.
The twin deals with Cinnober are one more vindication of the strategic turn the Stockholm developer made during the financial crisis. “Before Lehman, clearing technology was based on batch-oriented systems, file transfers and extremely old technology, but when we started, we decided to use our trading technology because we sensed that for clearing in the future, there would be a requirement for extremely fast calculations of risk,” said Nils-Robert Persson, Cinnober's chairman.
In addition to JPX, other Cinnober clearing clients include the Australian Securities Exchange, JSE Limited and Brazil's BM&F Bovespa. Persson said Cinnober is also beginning to focus on adding investment banks. “We still haven’t decided exactly how we will enter that market," he said, adding that developing business in this area may be done jointly with another firm.