Calypso Technology, a US trading technology company, is targeting emerging markets and asset portfolio management as the rush to build infrastructure to comply with new rules on derivatives trading pushed its annual turnover over $200m for the first time.
The group said revenue for the year to December 31 rose from $160m to a record $220m, while earnings before interest, tax, depreciation and amortisation rose more than 30 per cent to $72m. During the year it won deals to provide the technology for clearing over-the-counter derivatives for BM&FBovespa, the Brazilian exchange, CME Group, the world’s largest futures exchange, and Hong Kong Exchanges and Clearing.
The catalyst has been a mandate from the G20 group of economies in 2009, keen to strengthen the global financial system in the wake of the collapse of Lehman Brothers. Regulators want more of the OTC derivatives market processed through clearing houses, with some requiring clearing of trades to be done “as soon as technologically practicable”.
It has sparked a flurry of technology projects around the world as exchanges, banks and institutional investors build technology infrastructure capable of handling the changes.
Kishore Bopardikar, chief executive, called Calypso’s earnings growth in 2011 “a significant milestone in the company’s growth trajectory”. Founded in 1997, it has seen compound annual revenue growth of more than 40 per cent over the past 10 years. The group has had no outside investors and is owned by management and employs more than 600 people.
Mr Bopardikar added that the company was looking at growth in OTC derivatives management for local banks in emerging markets. Large foreign banks have greater experience in the industry but are scaling back some operations as they look to preserve capital to comply with new Basel III banking rules.
He also said the group would be looking at managing large asset portfolios that are being sold by banks to institutional investors.
“On some of these portfolios, the capital costs that the regulators are asking them to set aside are much higher than they used to be – sometimes by 3-4 times,” he said. “When they buy these portfolios [the buy-side] don’t have the infrastructure for them.”
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