Banks must be able to effectively analyse and understand their bilateral relationships with CCPs. The COVID-19 crisis illustrates the imperative of doing this properly now so that they can be well prepared for the recovery and the next market shock. CCPs and policy makers also need to understand the system-wide dynamics resulting from the unique positions of market participants and their interactions, before proposing and implementing changes.
By using a simulated environment based on ABMs that can both realistically and easily represent the real-world, banks and other market participants can better discuss and test potential policies, processes and strategy changes. Decisions will therefore be based on a greater depth of insight into a wider representation of system dynamics. This is because ABMs more accurately model the emergent (and irrational) behaviour found in the real world.
This partnership offers institutions an agent-based-modelling approach to simulate an artificial CCP market environment to understand, analyse, and quantify the effects of proposed changes to CCPs.
Deloitte’s ABM model is built jointly with Simudyne and Cloudera, an enterprise data cloud company. The combined technologies provide a highly scalable, cloud-enabled simulation solution.