The prevalence of having financial commodity positions cleared through a broker has elevated the amount of collateral margin that companies may have tied up in broker accounts. Margin balances can represent a significant liquidity challenge for companies, thus warranting strong controls and reconciliation. Visibility into and automation of margin calculations for current and prospective positions can not only help streamline internal processes but also help companies maximize the interest they earn on their cash. Please read on to hear how our technical solution can help your business optimize your margin.

In response to a variety of issues contributing to the 2008 financial crisis, the Dodd-Frank Act created several new regulations around swap and derivative clearing. With these new regulations, the importance and usage of clearing systems and posting margin were significantly enhanced. The CME serves an important role as a clearing agent to its members and their related clients.

Use Case: Clearing Margin Positions Via An Exchange With Span Calculators

Clearing and margining positions via an exchange involves the parties within a transaction making margin deposits with the clearinghouse (CME in this case).  The margin deposits help cover a counterparty’s credit risk to the cleared transactions. The amount of margin required for a given position or portfolio can fluctuate with the ever-changing pricing and volatility in specific markets, but generally equates to 3-12% of the notional value of a position.  Maintenance margin on nearby NYMEX futures on natural gas and crude oil is around 4-5% of notional value. The interest rates paid on margin balances are typically quite low at well under 50 basis points. A counterparty may be asked to make additional margin deposits or may be entitled to reduce their margin balance on a daily basis with any significant changes to market pricing or volatility.

The CME has developed a variety of tools to enable the automation of a counterparty’s margin calculation.  The CME ‘SPAN Calculator’ produces the initial and maintenance margin requirements of a portfolio with the inputs of position volumes.  The Value Creed team has experience integrating CTRM positions with the CME SPAN Calculator and enabling rapid reconciliation and visibility into these calculations.  This solution enables automation and streamlined processes including:

  • Downloading clearing broker statements
  • Automates calculation of margin amounts against CTRM positions – existing and prospective
  • Facilitates a reconciliation between broker statement and the CME SPAN calculation
  • Streamlines the business process for resolving margin disputes

This solution provides the tools to facilitate a rapid reconciliation of CTRM positions to the margin requirements requested by a clearing broker.  The benefits of using this solution include:

  • Avoidance of losing interest on carrying excessive margin balances
  • Verification of margin requests swiftly before sending additional margin
  • Visibility into future changes in margin against prospective positions.  Thus, enabling margin liquidity forecasting & planning.
  • Reduction in effort & time to reconcile margin requirements to a broker statement

About Value Creed
Founded in 2016, Value Creed brings a new model exclusively to the CTRM Ecosystem. With a focus on improving the effectiveness of CTRM customers in the run and operate phase, Value Creed’s expert-driven Managed Services provides CTRM customers with the expertise to get the most from their system, securely and rapidly move to the cloud and engage with experts to accomplish the support and enhancements that will truly help them achieve their business goals and vision with CTRM. Value is our mantra and promise. We pride ourselves on providing unparalleled value to our clients. Our team of experts leverages their deep energy industry & unparalleled CTRM technical experience to deliver a set of managed services and solutions that improve your return from your CTRM system, improve your users’ experience, and deliver greater value to your organization. Run Smart™, only with Value Creed.


Contact us to hear more about how Value Creed can streamline and optimize your margin liquidity & related processes.

Frame up what you need to know when you go to develop a business case for moving to the Cloud with this recording of “How To Build The Business Case For Taking CTRM To The Cloud.”

You’ll hear Priyankar Datta, CTRM consultant and Value Creed founder, as he explores “Must Have” takeaways like:

  • Performance Gains: How CTRM in the cloud will improve business value for users and why a “flexible” and “adaptable” IT infrastructure better supports their needs
  • Agility Realized: Ways the cloud allows you to quickly support geographic expansion, pivot and capitalize on new business ventures
  • Upgrades Simplified: Learn why the cloud gives your organization the ability to more rapidly adopt new releases and versions
  • Integration Streamlined: Understand how cloud-to-cloud integration is superior over the traditional on-premise deployment
  • Cost Savings: Realize efficiencies and quantify their effect
  • Finance & Accounting: Learn how cloud offerings are accounted for and how to address this as you construct your business case

Listen now, click below.  

> Special Resource: Checklist for Moving CTRM to the Cloud

Run-Smart™ for CTRM Coffee Break Chat

January 16, 2019 10:00 AM - 10:30 AM CST

Just as oil enabled many of the advances and conveniences that have made modern life, well, modern, so too cloud computing’s impact will reach deeper into every organization than just the IT infrastructure. The ubiquitous goal to get critical, always-on systems like your CTRM into ‘the cloud’ is colored by the perspective from which it is stated. To the IT team, this often means an evolution and transition from owned data centers to owned and shared network and server infrastructure. To application developers, it means an opportunity to finally begin to realize the dream of true shared services and more easily consumable software. But the real value may actually come from those that don’t yet internalize a value to the cloud: the business.

To the business, the cloud should represent the horizon more so than a particular location. A horizon of possibilities as they are released from the bounds and constraints of an infrastructure that is difficult to provision, must be consumed in large bites, and tweaked and managed by specialized experts. Cloud computing breaks each of these pieces into as small and consumable bites as the business might like to consume and allows for a virtual symphony of flavors to the mix of capability and services they need to build their most effective, efficient, and intelligent business process.

Moving to the cloud is often viewed as an end within itself, but today’s intelligent organization — those who value data analysis to make decisions and migrate their business processes to take advantage of market opportunities — view the move to the cloud as just the first step.

The CTRM / ETRM market has been slow to recognize the benefits of the cloud beyond optimizing the cost of infrastructure. More than most other packages, the immediate benefits often outweigh even the extreme bonus situation companies find themselves in from an infrastructure perspective. Here are a few key benefits to consider:

There is a new world for our application developers and our system implementers in the CTRM world. Those who take advantage of it will see a new acceleration of their satisfaction in their CTRM usage. Those who don’t will be stuck in a different kind of cloud — a dust cloud.

To learn more about moving your CTRM system to the cloud and transforming your business, contact us at 833-282-7333 or by email at sales@valucreed.com today to get started.

About Value Creed

Value Creed, LLC, founded in 2016, is a managed services firm headquartered in Dallas, TX, specializing in commodity trading and risk management technology and business process optimization. The firm offers expert-driven managed services, business process outsourcing, cloud enablement, and CTRM complimentary technologies to help CTRM customers achieve optimal value in their software investment. For more information, visit www.valuecreed.com