Denmark’s two largest pension funds have decided to buy in cleared and uncleared derivatives analytical services from the same software vendor, as they prepare for incoming regulations on the capital derivatives users must hold.
Labour-market supplementary fund ATP and PFA – the country’s biggest commercial pension provider – have both appointed the firm OpenGamma to provide the analytics ahead of the final implementation phases in 2020 and 2021 of the bilateral margin rules from the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO).
Lars Dreier, senior portfolio manager at ATP, said: “This new solution provides us with the ability to proactively manage our derivatives book as efficiently as possible.’’
Meanwhile, Thomas Kolling, senior portfolio manager at PFA, described the service as “a natural add-on” to the partnership the pension fund had had with the firm on cleared derivatives for almost two years.
“Margin analytics is becoming more and more important for our business and OpenGamma provides the necessary tools for us to do these analytics,” he said.
The margin software vendor said this was a “pivotal time” for the derivatives industry with voluntary OTC clearing on the increase, in anticipation of the funding challenges that non-centrally cleared derivatives margin requirements would present over the next 22 months.
There had been a trend recently, it said, for buy-side derivatives users to proactively establish funding, liquidity and optimisation capabilities across their cleared and uncleared derivatives portfolios.
Joe Midmore, chief commercial officer of OpenGamma, said: “These are transformational times for buy-side participants trading OTC derivatives and our recent traction in the Nordic market reflects the growing need for innovative margin analytics that meet the needs of large, sophisticated pension schemes and other asset owners.”