Capitolis Announces Successful SA-CCR Optimization Exercises Throughout Q1

Press Release
04/07/2022

Two-thirds of the largest global banks participated in Q1 2022 efforts

Recent progress includes compression innovations in SA-CCR optimization, reduction in exposure to Russian ruble

 

Capitolis, the technology company reimagining capital markets, is riding a strong wave of momentum as two thirds of the largest global banks have participated in balance sheet compression exercises leveraging Capitolis’ technology in the first quarter. These exercises have included optimizations with respect to the rollout of SA-CCR, or the Standardized Approach for Counterparty Credit Risk, as well as a reduction in exposure to Russian rubles. As we demonstrate our success, we have welcomed new bank participants in each exercise.

Capitolis has been innovating over the past year and a half to prepare for the rollout of SA-CCR and set financial institutions up for success when it comes to calculating exposure. The regulation requires banks to take a new approach to calculating counterparty credit exposure and will have a significant impact on regulatory capital calculations.

Capitolis’ capital optimization in line with SA-CCR regulation has reduced nearly a trillion dollars − and multiplying − of notional exposure for financial institutions in first quarter alone

SA-CCR has been phased in globally over the last few years to provide a single, standardized method by which financial institutions will be required to measure and ultimately manage and capitalize against. Capitolis anticipated a busy first quarter as SA-CCR went into effect in the United States and United Kingdom in January 2022. In the past three months, Capitolis has successfully reduced nearly a trillion dollars of notional exposure for financial institutions through a series of four multi-lateral optimization exercises.

“We are focused on helping our clients adjust to the regulatory impacts of SA-CCR while maximizing efficiencies in balance sheet optimization,” said Gil Mandelzis, CEO and Founder of Capitolis. “SA-CCR is something we have been innovating towards for years to better prepare financial institutions for success in multi-lateral optimization in line with the letter and spirit of the rule. Our vision is to reimagine how capital markets operate, and we look forward to continuing this work to enable a healthier, safer capital marketplace aligned with regulations including SA-CCR.”

Capitolis has been offering SA-CCR solutions to clients since mid-2020. Last year, the company performed multiple proof of concept optimizations, providing clients the opportunity to gain a better understanding of their data and internal processes as well as test and validate their own internal SA-CCR calculators. Many of the world’s largest financial institutions took part in Capitolis’ first-quarter 2022 compression runs, with growing participation and regular benefit for the whole capital markets system. This successful progress in optimization innovations sets the stage for an expanding footprint in the SA-CCR landscape in 2022 and beyond.

Capitolis successfully reduced Russian ruble exposure in risk reduction exercises for global banks

Following Russia’s invasion of Ukraine, Capitolis was approached by many of the world’s leading financial institutions seeking a targeted solution to manage and reduce exposures to the Russian ruble. Capitolis worked quickly to bring together a large network of global banks and, through its trade compression platform, supported a dozen banking entities to successfully reduce their exposure to Russian rubles and mitigate the impact of settlement failures due to sanctions or other market happenings. These banks needed the right technology and a trusted third party that had established its capabilities and credibility with them to execute. Capitolis’ trifecta of technology, relationships and trust got it done.

Capitolis has now completed two Russian ruble exposure reduction exercises, one of which was executed and managed in just three days following the invasion in Ukraine. In total, billions in redundant, notional exposures were reduced on behalf of the 17 global bank participants. The company will donate half of the revenues from these compression activities to Ukrainian relief and humanitarian efforts.

Capitolis intends to continue offering a Russian ruble compression run as long as it is needed by financial institutions.

For more information on the work Capitolis is doing with SA-CCR, and the recent Russian ruble optimization exercises, please visit www.capitolis.com.

 

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