CDCC Benefits From BookRunner®
RiskAdvisory's BookRunner® has helped the Canadian Derivatives Clearing Corporation (CDCC) expand its business and service offerings to customers in the energy sector.
The CDCC is the issuer, clearinghouse and guarantor of exchange-traded interest rate and equity derivative contracts in Canada. Recently, CDCC saw a huge business opportunity to offer credit risk management solutions to an energy sector that had been ravaged over the last decade by the collapse of some large and prominent companies such as Enron.
"The liquidity of the market had dried up," says Michel Favreau, CDCC's Vice-President and Chief Clearing Officer. "Market participants are now starting to reset their credit standards and resume full trading activity, so we see a huge opportunity. We know that if we can provide good credit risk management solutions, the volume of transactions should grow and we and our customers could both benefit."
CDCC got together with the Oxen Inc., the parent company of the Alberta Watt Exchange to form a joint venture company, Clearco Inc. to offer power-related market instruments and products. "We brought in clearing and risk management capabilities and they provided strong knowledge of the energy market," says Favreau.
Clearco needed a product in place quickly to capitalize on the opportunity to provide a scalable clearing platform into the Canadian Energy market. It also needed a solution that was flexible and expandable enough to handle other products. "We needed a quick solution that would also allow us to extend the clearing platform for energy contracts to include natural gas and large financial contracts, and other products," says Favreau.
After a search, CDCC decided to purchase BookRunner®. The program was installed and modified and CDCC's staff were trained in its use in just a few months.
"After reviewing a number of vendors we selected BookRunner® ," says Favreau. "The main deadline was met and the functionality was extended so we were able to get up and running and begin servicing our customers on Jan. 4, the first trading day of this year."
Favreau says he was particularly impressed with BookRunner®'s flexibility to add different modules and the speed and ease of installation and training of CDCC's eight staff members who use the product.
"BookRunner® is used by many trading firms, but we manage the books of those firms and therefore some customization was required to handle reports and other things," says Favreau. "The customization was well understood and well developed. And it only took a few days for our people to be trained to learn how to use the product. Overall, the project went very well."