Today Finastra announced its over-the-counter (OTC) derivatives solution Fusion Summit will integrate with the Fragmos Chain post trade solution. The integration will be available in Finastra FusionFabrice, the company’s app store. Fragmos Chain is expected to go into production early in 2023.
To explore the role of Fragmos Chain, it’s worth taking a quick look at the recent UK mini-financial crisis, which was linked to derivatives. Interest rates are crucial to life insurers and pension funds, so they hedge against significant movements.
With the mini crisis, there wasn’t a problem with the functioning of the derivatives (interest rate swaps), but the fact that interest rates moved so substantially after the new UK Chancellor made unexpected economic plans. That meant massive collateral calls created a liquidity issue because some of the insurers and pension funds had to sell assets quickly to meet the calls.
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