SILVERWOOD PARTNERS ADVISES OMGEO IN ITS ACQUISITION OF ALLUSTRA AND A DERIVATIVES RECONCILIATION SOLUTION FROM GLOBAL ELECTRONIC MARKETSSHERBORN, MA – September 15, 2008
Omgeo, the global standard for post-trade efficiency, today announced that it has acquired Allustra, a London-based provider of collateral management solutions. Allustra offers a suite of products that provide customers the ability to consolidate trade positions across asset classes, including OTC derivatives, and to manage the collateral process that mitigates the associated counterparty risk. Mark James, managing director of Allustra, joins Omgeo’s executive committee as managing director. Silverwood Partners was the financial advisor to Omgeo.
In addition, Omgeo acquired a derivatives portfolio reconciliation platform designed by Global Electronic Markets (GEM), after piloting the technology with one of the largest brokers/dealers and one of the most sophisticated hedge funds in the world. By joining GEM’s derivatives reconciliation capabilities with Allustra’s collateral management solution, Omgeo sets a new standard for the market as the only organization to provide clients such a combined derivatives product line. Silverwood Partners was the financial advisor to Omgeo.
“We are truly excited to extend our expertise in operations beyond matching and allocations,” said Marianne Brown, president and CEO of Omgeo. “By acquiring Allustra, Omgeo can provide its community access to the leading collateral management solution available today. Combining this with GEM’s unique derivatives reconciliation technology means we are poised to truly change the way the industry manages counterparty risk.”
Over the past five years, investment managers have dramatically increased the use of derivatives within their portfolio management strategies and, as a result, augmented the use of collateral to manage risk. Today, more than 2 trillion USD of cash and securities are being used to mitigate that risk. While trade strategies have become more sophisticated, the infrastructure to manage operational risk in the back office has not kept pace. Omgeo has successfully set the standard of efficiency for post-trade matching and allocations; with its combined derivatives reconciliation and collateral management offering, Omgeo is extending its operational expertise to automate post-settlement life cycle events.
“There is an urgent need for a standard, automated process for investment managers to reconcile derivative positions and confirm the movement of collateral,” said John Devine, COO of Threadneedle Asset Management and a member of Omgeo’s Board of Managers. “The market sees Omgeo as the logical provider of a solution that combines both derivatives reconciliation and collateral management, as they truly understand the operational pain-points of the financial community.”
Omgeo’s derivatives solution will automate processes that are predominantly manual, including reconciliation and dispute management (derivatives positions, mark-to-market values, payments amount and margin amounts), margin calculations, collateral inventory management and the collateralization process with counterparties. This combined approach will allow Omgeo’s clients to realize operational efficiency, reduce operational risk and more effectively manage their counterparty credit risks. The Omgeo derivatives offering will be available for all Omgeo clients, including hedge funds, investment managers, prime brokers, broker/dealers and custodians.
“We are thrilled to join the Omgeo community,” said Mark James, managing director of Allustra. “Over the past seven years, we have strived for excellence in the collateral management space. By aligning with Omgeo, the market leader for providing operational stability in the post-trade world, and by continuing to partner closely with our clients we will keep developing the ground-breaking solutions required by the market.”
“Given that our research in the market indicated a growing need for a centralized solution for reconciling portfolios of derivatives, we decided to combine our market-proven reconciliation technology with the Omgeo infrastructure to address this critical need. We have invested five years of research and development on addressing the unique problems of reconciling portfolios of derivatives and are excited about delivering that capability to the Omgeo community,” said Brian Lynn, CTO and founder of GEM.
Omgeo will continue to expand its derivatives suite of services. Next year, Omgeo Central Trade ManagerSM will offer functionality for exchange-traded derivatives. Other enhancements will also be made over the next several months.
Omgeo creates certainty in post-trade operations through the automation and timely confirmation of the economic details of trades executed between investment managers and broker dealers. Every day Omgeo enables an efficient community of more than 6,000 financial services clients in 45 countries to manage matching and exception handling of trade allocations, confirmations, and settlement instructions. Leading organizations rely on Omgeo to help manage an increasingly complex investment industry by providing operational stability and solutions that complement the focus on profitability in an era of escalating trade volumes. Across borders, asset classes, and trade lifecycles, Omgeo is the global standard for operational efficiency across the investment industry. Formed in 2001, Omgeo is jointly owned by the DTCC and Thomson Reuters.
Allustra is the solely dedicated to providing collateral and margin management solutions. Its products help firms of all sizes and complexions, such as investment banks, prime brokers, custodians, hedge funds and large corporations, to mitigate credit risks and minimize operational risks.
Event-driven, configurable workflow, dashboards and asset management are at the heart of Allustra's solutions, which are modular and have been designed to enable firms to meet all their margining requirements on centralized, automated basis. Support for end-to-end collateralization across asset classes is standard and this is complemented by additional modules dedicated to Cash Management and Inventory Management, among others.
About Global Electronic Markets
Global Electronic Markets (www.global-emarkets.com) provides services and products for firms using FpML and related standards. GEM's services include standards development and advice, technology management consulting and portfolio reconciliation services using GEM's FpML toolset. GEM Development supports a set of products focused on enabling the creation, reconciliation, transformation and storage of FpML and related standards. Brian Lynn, GEM's CTO, is an editor of the FpML standard, a member of the FpML Standards Committee, and chair of the FpML Pricing and Risk working group. GEM is based in Ulster County, NY.
About Silverwood Partners
Silverwood Partners is a specialized investment bank that provides mergers & acquisitions and private placement advisory services to information technology, communications technology, consumer products, business services and healthcare companies. For additional information, please visit www.silverwoodpartners.com.
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