Bloomberg Expands MARS Solution to Tackle Derivatives Risk Regulations Enhancing Compliance Support
On February 5, 2025, Bloomberg unveiled significant enhancements to its Multi-Asset Risk System (MARS), aimed at aiding clients in complying with stringent global derivatives risk regulations. The updates come in the wake of the implementation of SEC Rule 18f-4, which mandates that investment funds establish comprehensive derivatives risk management programs. This rule enforces a strict limit on fund leverage risk based on Value-at-Risk (VaR) calculations, which are pivotal in measuring a fund's exposure to potential market fluctuations.
Initially rolled out in 2022, MARS began offering support for SEC Rule 18f-4 in 2021, with continuous expansions to assist clients in meeting additional regulatory requirements from jurisdictions such as Europe and Canada. For instance, clients now benefit from tailored solutions that align with European regulations like AIFMD and UCITS, as well as Canada's NI 81-102 regulations monitored by the Ontario Securities Commission.
One of the standout features of MARS is its ability to calculate VaR for both Relative and Absolute VaR tests. These calculations are essential in helping clients assess their leverage risk accurately. Furthermore, Bloomberg is providing its clients with an out-of-the-box VaR model backtesting option that can be customized based on different time horizons, enhancing their risk assessment strategies.
The MARS Market Risk solution offers a thorough market risk workflow, which allows users to pinpoint the various market variables that influence the valuation of diverse financial instruments. This capability is complemented by a wide range of stress testing methodologies, including historical stress tests, asset class-level stress tests, and predictive tests based on correlation insights. By marrying VaR assessments with robust stress testing options, MARS equips fund managers with a complete derivatives risk management program as mandated by SEC Rule 18f-4.
Ben Wallach, WisdomTree’s Head of Product Development ESG, remarked on the advantages of using MARS, stating, “Ahead of the implementation of Rule 18f-4, we were confident in our preparedness due to our adoption of MARS. Bloomberg has been an invaluable partner, providing us with a comprehensive risk offering that allows us to uphold our commitment to accessibility and transparency in financial products.”
Dharrini Bala Gadiyaram, Bloomberg’s Global Head of Buy-Side Risk, Compliance, and Treasury Solutions, emphasized the company's ongoing commitment to refining its services in response to evolving regulatory standards. “We take pride in enhancing our solutions so that clients can navigate complex regulatory landscapes with ease. MARS is designed to integrate seamlessly into existing workflows, ensuring that our clients can efficiently manage their compliance obligations,” she stated.
Bloomberg’s MARS suite, accessible through the Bloomberg Terminal and APIs, serves around 1,100 professionals across more than 900 client firms. The suite is essential for traders, portfolio managers, and risk managers, providing them with real-time analytics, innovative pricing libraries, and comprehensive market data. Its features extend beyond market risk to include counterparty risk, credit risk, hedge accounting, and collateral management, giving firms a holistic view of their operations.
In summary, Bloomberg’s enhancements to the MARS solution signify a pivotal step in enabling clients to navigate the complexities of derivatives risk regulations effectively. With these updates, firms can feel equipped to meet the challenges posed by evolving regulatory environments, ensuring both compliance and operational efficiency.
Initially rolled out in 2022, MARS began offering support for SEC Rule 18f-4 in 2021, with continuous expansions to assist clients in meeting additional regulatory requirements from jurisdictions such as Europe and Canada. For instance, clients now benefit from tailored solutions that align with European regulations like AIFMD and UCITS, as well as Canada's NI 81-102 regulations monitored by the Ontario Securities Commission.
One of the standout features of MARS is its ability to calculate VaR for both Relative and Absolute VaR tests. These calculations are essential in helping clients assess their leverage risk accurately. Furthermore, Bloomberg is providing its clients with an out-of-the-box VaR model backtesting option that can be customized based on different time horizons, enhancing their risk assessment strategies.
The MARS Market Risk solution offers a thorough market risk workflow, which allows users to pinpoint the various market variables that influence the valuation of diverse financial instruments. This capability is complemented by a wide range of stress testing methodologies, including historical stress tests, asset class-level stress tests, and predictive tests based on correlation insights. By marrying VaR assessments with robust stress testing options, MARS equips fund managers with a complete derivatives risk management program as mandated by SEC Rule 18f-4.
Ben Wallach, WisdomTree’s Head of Product Development ESG, remarked on the advantages of using MARS, stating, “Ahead of the implementation of Rule 18f-4, we were confident in our preparedness due to our adoption of MARS. Bloomberg has been an invaluable partner, providing us with a comprehensive risk offering that allows us to uphold our commitment to accessibility and transparency in financial products.”
Dharrini Bala Gadiyaram, Bloomberg’s Global Head of Buy-Side Risk, Compliance, and Treasury Solutions, emphasized the company's ongoing commitment to refining its services in response to evolving regulatory standards. “We take pride in enhancing our solutions so that clients can navigate complex regulatory landscapes with ease. MARS is designed to integrate seamlessly into existing workflows, ensuring that our clients can efficiently manage their compliance obligations,” she stated.
Bloomberg’s MARS suite, accessible through the Bloomberg Terminal and APIs, serves around 1,100 professionals across more than 900 client firms. The suite is essential for traders, portfolio managers, and risk managers, providing them with real-time analytics, innovative pricing libraries, and comprehensive market data. Its features extend beyond market risk to include counterparty risk, credit risk, hedge accounting, and collateral management, giving firms a holistic view of their operations.
In summary, Bloomberg’s enhancements to the MARS solution signify a pivotal step in enabling clients to navigate the complexities of derivatives risk regulations effectively. With these updates, firms can feel equipped to meet the challenges posed by evolving regulatory environments, ensuring both compliance and operational efficiency.
Topics Financial Services & Investing）
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