Traiana has made changes to its Credit Risk Hub that will enable FX prime brokers (FXPBs) to define trade information in more detail in order to increase credit risk controls and reduce the risks of credit over-allocation.
Traiana’s Credit Risk Hub comprises two services; Designation Notice Manager (DNM), which helps FXPBs establish, monitor, amend and terminate FX Tri-Party Agreements with buy side clients if they default on a trade; and CreditLink, a calculation engine that provides FXPBs with end-to-end control of how much credit is extended to buy side clients.
Beginning this May, the Credit Risk Hub will allow FXPBs to define which eligible FX instruments, currency pairs and tenors buy side managers can trade as part of Tri-Party Agreements, which in turn impacts the level of credit extended to them. By documenting this level of trade granularity in DNM, CreditLink can monitor the additional trade detail, providing greater control to prevent over-allocation of risk to clients. Executing brokers and prime brokers also will have access to the same level of trade detail to ensure they remain in compliance with the Tri-Party Agreements.
“The enhancements to our Credit Risk Hub build on our world leading franchise and allow us to act as a central hub for the calculation, distribution and enforcement of credit lines across prime brokers, executing brokers and their end clients,” says Andres Choussy, CEO of Traiana.
“Citi is focused on giving clients enhanced trading flexibility, while prudently managing our credit exposure. Credit Risk Hub’s new enhancements are a key complement to Citi FX PB’s suite of risk management controls and facilitate increased market access for our clients,” says Mariam Rafi, managing director, Americas head of OTC clearing at Citi.
“Control over credit risk is a key concern for us and our clients. Working with Traiana’s enhanced tools, we are able to provide added controls coupled with increased credit, tenor and product scope. This enables more efficient execution of clients’ trading strategies, while also strengthening our risk management as an intermediary,” adds Leah Mallas, global head of FXPB and FX clearing at JP Morgan.