The Dubai Commodities Clearing Corporation (DCCC), the leading Central Counter Party (CCP) in the region and a wholly owned subsidiary of the Dubai Gold & Commodities Exchange (DGCX), has announced the launch of a state-of-the-art Risk Management System (RMS) called ActiveRisk.
ActiveRisk, developed by Chella Software (CSPL), has been deployed by DCCC with the primary objective of enhancing its regulatory compliance in line with the PFMI (Principles for Financial Markets Infrastructure) standards and also ESMA (European Securities and Markets Authority) technical standards under European Market Infrastructure Regulation (EMIR).
The key feature of ActiveRisk is to identify the aggregate counterparty credit risk during default scenarios. While also verifying the adequacy of liquidity resources in a market stress condition with the identification of material impacts of tail events on clearing member and customer exposure.
With the enhanced system in place, DCCC will conduct Stress Tests on a daily basis to effectively measure its resilience against the default of its top Clearing Members and its corresponding cascading impact, while Reverse Stress Testing will challenge the resilience of the DCCC liquid resources under stressful scenarios. This will help DCCC in not just determining the appropriate margin requirements but also better gauge short-term liquidity challenges amidst adverse price movements. These tests are in accordance with international and federal CCP regulatory requirements and global best practices.
DCCC, recently recognized by ESMA as a Third-Country CCP, has not had a single default since its inception and has earned itself the reputation of being a credible and reliable partner for clearers, clients and market participants of the DGCX. With the deployment of ActiveRisk, DCCC will further strengthen its risk management framework.
Gaurang Desai, CEO of DGCX
Gaurang Desai, CEO of DGCX, commented on launching the new risk management system:
At DGCX we firmly believe in stronger risk management norms for the safety of our markets. Whilst continuing to enhance efficiencies in our systems and processes by deploying the latest technology so that our members and their clients can trade with confidence. As we significantly step-up our operational standards to adhere to IOSCO and other regulatory requirements, we are also aware that advancement in risk management is the need of the hour. Implementation of ActiveRisk is a vital step towards elevating DCCC’s risk management practices.
Kathir Kamanathan, Founder, and CEO of Chella Software Private Limited said:
We are very pleased to go live with our ActiveRisk system for the DCCC, the largest CCP operator in the region. We design risk systems that not only meet the best compliance standards but also deliver a distinct competitive advantage to both Exchanges and CCPs. We are honored to be chosen by DGCX Group to be their partner in this endeavor.
The DCCC is one of the largest and most diversified CCP operators in the Middle East, offering clearing services across multiple asset classes. DCCC also offers Clearing Members the option of settlement in multiple currencies along with accepting a wide range of collaterals against margins. Following the third-country CCP recognition from ESMA, DCCC is now able to provide clearing services to European financial institutions. The DCCC is regulated by the Securities & Commodities Authority of the UAE (SCA).