Digital transformation is happening across every sector, and banks in particular are beginning to recognize a digital framework that allows their services to be accessed from anywhere will be key going forward.
The importance of relationships in FX has proved central to institutional trading in recent months. Not that relationship trading ever went away in the FX markets. However, in a clear ‘Back to the Future’ development, the role of the single dealer platform (SDP) is once again having a resurgence.
As pubs and restaurants begin to open their doors in England, so too are the world’s global banking giants. After a prolonged period of working from home, many of the top banks such as HSBC and Goldman Sachs have announced plans to urgently bring workers across the world back into the office.
The question is: Why the rush?
As novel COVID-19 has swept the globe, financial institutions can still remain focussed on trying to operate business as usual and serve their clients. No doubt this continuity can be achieved largely in part with access to the right technology.
It is true that banks are having to do more, with less budget. Recent headlines have demonstrated we’re currently operating in an increasing cost pressured environment. The solution for some banks has been cost cuts through staff reductions – but is this always the right answer?
With increasing popularity to outsource FX technology at banks, Vikas Srivastava, Chief Revenue Officer at Integral, gets to the core of the matter and explores how to outsource the notoriously complex risk management technology stack.
Integral recently spoke on a Greenwich Associates Webinar discussing the key technology criteria an FX desk at a bank needs to compete. It came as no surprise that during an interactive polling session with the audience, senior representatives from regional banks cited risk management was the hardest component of the FX technology stack to outsource.
On the surface, the news that BCBS and IOSCO have granted an extension to the final phase of the Uncleared Margin Rules (UMR) is likely to be welcomed by asset managers currently trading uncleared derivatives with a notional between $8 billion and $50 billion.
The extension pushes the initial margin compliance date out by exactly one year to September 2021 for an estimated 8000 firms. However, this additional year does not apply to the 1000+ firms that have a notional threshold between $50 billion and $750 billion. And to be honest, the truth is that much elbow grease is still needed in the coming months to prepare for what is essentially a major structural change, regardless of whether an asset manager falls under Phase 5 or Phase 6.
In an era where pundits like to predict doom and gloom for banks FX businesses, Integral’s Chief Revenue Officer Vikas Srivastava offers a different perspective that shows how a change in the approach towards technology can allow heads of FX desks to significantly increase their profits – even during the periods of low volatility.
We’re all aware that the size of the FX pie hasn’t been growing. The latest triennial survey by the BIS supports this sentiment, having flagged a decline in FX volumes for the first time in 15 years. After the slow-down in market activity amidst the spate of regulations that the FX market had to contend with it is quite likely that the worst may be behind us. Continue reading Why now is the time for a fresh approach towards FX technology at banks
Just as asset managers recover from the herculean effort of preparing for MiFID II, along comes another rule to adhere to. As of this September, uncleared initial margin rules will hit hundreds of asset managers. The objective is ultimately to make over-the-counter (OTC trades) costlier so that more firms turn towards trading on regulated venues.
The overall impact of these rules is likely to be significant – with numerous asset managers set to manage margin with a large number of counterparties at the same time. One emerging trend is for asset managers to turn towards their prime brokers for clearing services. While this is not exactly new, the rules mean those asset managers with portfolios above €750bn in notional, who have never previously had to post margin, will suddenly have to do so. The year after that (September 2020), the notional threshold drops dramatically to $8bn! Continue reading Why uncleared IM rules will spur innovation among asset managers
For many firms, the RTS-28 requirement and the upcoming RTS-27 reports are proving to be a headache. Collecting complex data on this large of a scale and on a detailed level is a complicated effort that requires integrated data science services with a depth of trade data and robust analytics that allow customers to address these regulatory and reporting challenges. Given these exacting standards, cloud-based platforms are ideal in offering the most sophisticated and flexible MiFID II-compliant solutions.
MiFID II continues to present challenging obligations for financial institutions nearly six months since the rule first went into effect. RTS-28, the most recent regulatory hurdle under MiFID II, is meant to ensure transparency and keep firms accountable to best execution policies when transacting on behalf of clients. The reporting standards under RTS-28 require investment firms to disclose their top five execution venues, publish granular details on the execution data obtained at each of these venues, and provide a qualitative review of their best execution policies accompanied by an analysis of how execution is performed. Continue reading Firms Continue to Turn to Cloud-Based Solutions to Comply with MiFID II Rules