Minium, IBM and Promontory release joint white paper
19 February 2018 London
Image: Shutterstock
The patchwork of outdated systems most firms use today is not fit for purpose, according to a white paper jointly released by Minium, IBM and Promontory.
The white paper, titled 鈥楾he Way Ahead for Derivatives Clearing and Prime Services鈥�, said that 鈥渇irms simply will not be able to deliver the right level of return on equity for their clearing and prime brokerage businesses without a radical reassessment of their technology stacks鈥�.
It stated that what is needed is 鈥渁 system capable of producing a current view of collateral positions, including what has been pledged or recalled鈥�.
Minium, IBM and Promontory also discussed some of the key challenges faced by the sector, such the cost of operational processes, the ongoing wave of new regulations and their impact on existing systems.
On a positive note, the white paper explained that in terms of regulatory trends, regulatory bodies and market participants, including central counterparties (CCPs) continues to 鈥渋mprove the quality of trade-repository data鈥�.
It added that 鈥渋t will be important for CCPs to demonstrate to supervisors that they are properly managing operational risk [incorporating] industry best practices and supervisory expectations鈥� but that clearinghouses and investment banks still need to 鈥減ay close attention to the operational risks associated with trading, clearing and settlement鈥�.
The white paper also explained the importance of the General Data Protection Regulation (GDPR) and the European Market Infrastructure Regulation (EMIR) in establishing 鈥減rudential and risk-mitigation techniques and operational requirements for derivatives transactions.鈥�
It added that EMIR will require CCPs and trade repositories to 鈥渇ulfill prudential minimum requirements鈥�.
The white paper, titled 鈥楾he Way Ahead for Derivatives Clearing and Prime Services鈥�, said that 鈥渇irms simply will not be able to deliver the right level of return on equity for their clearing and prime brokerage businesses without a radical reassessment of their technology stacks鈥�.
It stated that what is needed is 鈥渁 system capable of producing a current view of collateral positions, including what has been pledged or recalled鈥�.
Minium, IBM and Promontory also discussed some of the key challenges faced by the sector, such the cost of operational processes, the ongoing wave of new regulations and their impact on existing systems.
On a positive note, the white paper explained that in terms of regulatory trends, regulatory bodies and market participants, including central counterparties (CCPs) continues to 鈥渋mprove the quality of trade-repository data鈥�.
It added that 鈥渋t will be important for CCPs to demonstrate to supervisors that they are properly managing operational risk [incorporating] industry best practices and supervisory expectations鈥� but that clearinghouses and investment banks still need to 鈥減ay close attention to the operational risks associated with trading, clearing and settlement鈥�.
The white paper also explained the importance of the General Data Protection Regulation (GDPR) and the European Market Infrastructure Regulation (EMIR) in establishing 鈥減rudential and risk-mitigation techniques and operational requirements for derivatives transactions.鈥�
It added that EMIR will require CCPs and trade repositories to 鈥渇ulfill prudential minimum requirements鈥�.
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