Frequently Asked Questions
Published 25 Apr, 2019
1. What is OptiMargin? Software as a Service product that optimizes your margin costs by running multiple scenarios and generating various recommendations for optimization (i.e. Switches between Nymex vs ICE would be one of those recommendations). OptiMArgin's goal is to reduce margin costs without affecting risk.
For example, if you have 1 FCM/Clearing Broker and trade on 3 exchanges (ICE, Nymex, NDQ) your company can expect 25% savings on your margin (meaning if you margin was 10m, you can see it go down to 7.5mm) see more scenarios
2. How does OptiMargin Work? Imagine you ran a scenario to optimize your margin position, pulled up PC SPAN Tools and manually calculated the cost of the position on one broker, or one exchange - that would be considered one 'CALL'. OptiMargin runs 20,000 calls per night and again during the day using big data analysis tools.
3. How does it run optimization? 2-5 hours overnight and 5-15min during the day. It Optimizes your nominal margin as well as taking into consideration execution costs ('switch' prices) and overnight margin interest rates. output comes in the form of an Email and ChatBot for traders. For Operations/CFO we have a browser based GUI set up.
4. Do you have any current Customers? yes, several trading firms have signed up and proof of concept demonstrated cost saving of over 50%+ of margin. (individual results vary based on several factors)
5. We only use on clearing broker, how will OptiMargin affect our book? The problem is that every exchange margins differently, and that creates a great deal of inefficiency and money hidden in the fine print. Take a simple position like WTI-BRT ('arb') and compare how those were margined in 2018. The optimization is not in offseting look alike contracts across exchanges, but in the inter-commodity credit offset given how various exchanges margin differently. Imagine GEICO Charged 100% over StateFarm for the same risk? its the same idea.
6. What does Ulysses, a broker, have to do with FinTech? Instead of developing technology and getting Venture Capital money that would ultimately dilute the end product for you, we develop technology in house by re-investing to create a more consistent revenue stream (brokers volatility ranges in the hundreds of % from month to month and they are not allowed to have debt as per NFA/CFTC). OptiMargin generates margin saving recommendations, which the brokers execute in turn.
7. If I get OptiMargin do I have to execute with Ulysses? no. we only ask for the first look. If we don't have it, shop it away.
8. What about Data, you'll see my positions, right? No. We treat customer's position data as a liability rather than an asset. You can install OptiMargin on any server you like (under your desk, in company cloud, etc) and control access and custodianship of your data from there. We have xero access or custody of your data. it is connected directly from your FCM and updated as often or as seldom as you indicate.
9. How long is onboarding? If dedicated right internal staff, you can be up and running in a day.
10. How much does it cost? The cost of the software is free for 2019 (that's right fee holiday for 2019), while Ulysses charges its standard execution brokerage.
11. Can I invest in OptiMargin? We really want customers to be our investors, so post-2019; payment for the software can double as investments in the company and you can double dip for equity. This is a longer conversation, but you get the idea.
12. Why can't we build it ourselves? We have no doubt you can! you'll need to allocate 5-7 pple to this project and expect results after 18-24 months. Dealing with the archaic and minutia legacy exchange technology have around (they can afford not to innovate as everyone licenses PC-SPAN) can be very frustrating and slow. Its really just cost of wo/man hours vs benefit accrued.
13. Is this a Trading or Operations Software? This is a trading tool first-most, operation second most. Traders incorporate the information throughout the day and decide if and when they want to calibrate cost of funding, position limits, leverage ratios, and market volatility, by executing margin recommendations. MARGIN IS AN INTEGRAL PART OF TRADING. Operations and Finance would are included in the process, and receive periodic updates, but they do not react to the market on a daily basis. Its the traders taking the information in and making decisions.