Trading Technologies International, Inc. (TT), a global provider of high-performance professional trading software, infrastructure and data solutions, and KRM22 plc (AIM: KRM), the technology and software investment company that focuses on risk management for capital markets, today announced that it is making the KRM22 Risk Manager available to customers on the TT platform. The sophisticated real-time post-trade risk service significantly enhances the risk toolset available through TT’s growing ecosystem for futures commission merchants (FCMs), brokers and traders.
The product’s risk scoring system will help users instantly assess real-time margin and liquidity, creating a new way for futures and options on futures traders to generate alpha under the most volatile market conditions. The offering currently covers margin on existing positions and provides a full range of analytics behind those positions, including the ability to anticipate end-of-day margin. In the first half of next year, TT will add functionality for margin on open orders, giving the brokerage community serving firms and individual traders new tools to manage risk at the time of the trade.
Jason Shaffer, TT EVP Product Management, said: “We continue to execute on our strategy to enhance the value we bring to customers on the TT network. This latest step fulfills the commitment we made earlier this year to bring powerful KRM22 risk tools into our platform.”
KRM22 CEO Stephen Casner said “This specialized risk service, available exclusively on the TT platform, is the culmination of four years of developing the next generation of market risk services on KRM22’s Global Risk Platform. Allowing TT users real-time margin analytics across multiple exchanges with multiple margin methodologies will equip TT users to be prepared to meet the latest challenges facing futures and options traders today and well into the future.”
Traders and risk managers on the TT platform can leverage KRM22 Risk Manager to deliver exchange margin and stress calculations through the click of a button. Users can view start-of-day (SOD) and intraday margin calculations and stress results that update with each position change. SOD and intraday margin calculations include Initial Margin, Maintenance Margin, Net Option Value (NOV), Credit Allowance/Margin Ratio and Margin Risk Score.
The tool also provides full and granular visibility into exchange margin values throughout the day at the commodity code level, giving traders and brokers the ability to determine margin concentration and better understand when they are approaching margin and credit limits, and offering FCMs the capability of setting alerts to trigger on predefined margin and credit limits, along with other risk-reduction tools.
Stress risk calculations provide independent risk checks and include standard deviation formulas and 20% volatility shocks to options positions at each standard deviation point, worst-case maximum loss outcomes and appropriate risk offsets in stress calculations on related instruments as well as a credit allowance/stress ratio and stress risk score.