Given the collective expertise of the bailrigg+ senior management team, we like to publish periodic insights that our clients and consultants will find of interest:
Insights
Post-Trade Market Services – Keeping Pace with the Industry
As we enter the last month of the year, some firms will be scrambling for a big push to complete 2024 deliverables. Others will already be thinking about next year’s book of work. A lot of what is in flight and planned for future years is non-negotiable – mandated by Regulators and required by many firms simultaneously across the financial sector.
In this article Duncan Scott (Post-Trade Market Services Lead) reviews the trending issues, topics and deliverables and offers insights based upon his current conversations and research, and as most people would expect, concludes that in fact, there is always more going on than simply keeping up with regulations.
Author: Duncan Scott – Post-Trade Market Services
Navigating Agile Transformation: Challenges and Benefits in Financial Services
In the fast-paced world of finance, where agility is paramount and adaptability is key, the adoption of Agile has been a buzz phrase for almost two decades. However progress towards this goal has in many areas remained a relatively slow burn. Agile, originally developed for software development, has found its way into various industries, including financial services, promising increased efficiency, faster time to market, and enhanced client satisfaction. However, while the benefits are enticing, the journey towards Agile transformation in financial services comes with its own set of challenges, which help explain its slow adoption.
Author: Joe Coquelin – Markets Strategy and Technology
The Impacts of AI on the Financial Services Workforce
As we are all now well aware, AI adoption is a hot topic amongst every Financial Services firm within the industry. From ruminations pre-2020, technology and data advances have accelerated the viability of AI systems and this has stimulated a rapid evolution of potential applications, all of which are aimed at increased productivity, efficiency and ultimately profitability.
But with this in mind, how will the impact of AI implementation actually be felt within today’s Financial Services workforce, and more importantly who is likely to be the most impacted and when. Will AI replace the higher-skilled, more complex roles that require deep cognitive skills, or will it solely target the lower-skilled parts of the workforce whereby processes can be easily automated?
Author: Chris Hellings – Data Analytics, AI and Business Optimisation
How can Asset Managers maximize the value of their partnerships with Prime Brokers?
In this Insight article, we aim to highlight how Asset Managers can navigate the challenges of choosing and maintaining a symbiotic relationship with their Prime Brokers and where this function can sit within their organisation. At the time of going to press, the Basel 4 regulations are being digested, meaning the importance of this dynamic is likely to increase further.
Author: Chris Maynard – Client Strategy and Optimisation
Data Analytics or Artificial Intelligence?
Everyone is talking about Artificial Intelligence (AI). From Larry Fink (CEO of Blackrock) predicting AI could solve the productivity crisis and bring down inflation, to Jane Fraser (CEO of Citi) stating AI has the potential to revolutionise all functions across the banking industry. There is no doubt that this technology is a game-changer, just like electricity, railways, and computing. But unlike these three, which took decades before they generated productivity booms, this technology has the potential to transform how we work and interact much faster, as AI technology is far less capital-intensive.
But what is AI and what’s the difference between AI and Data Analytics?
Author: Muoi Block – Data Analytics and Business Optimisation
The Benefits, Challenges and Recommendations for a Successful Transition to T+1
Over the past decade at bailrigg+, we’ve been involved in delivering some of the largest industry and regulatory changes for our clients. Within the Securities Industry there’s no doubt that the key looming deadline is the upcoming US T+1 transition happening in mid-2024. Associate Partner and leader of our Post-Trade Practice area, Duncan Scott, explores the background, benefits and challenges, and provides some useful recommendations for ensuring a successful transition to this compressed settlement cycle.
Author: Duncan Scott – Post Trade Markets Services
The Value of Control Standards
Author: John McNiff – Risk and Control
Getting the basics right is key to effective risk management. Firms will have Policies and Procedures, but often there is a void when it comes to providing teams with practical advice on how to design their controls.
Control Standards fill this void. Informed by Policy, they provide a common set of expectations and requirements for implementing key controls, regardless of the business unit or department involved.
Aligning Your Target Operating Model & Technology Strategy – The Key to Global Markets Success?
Following the recent instability and turmoil in the banking sector, the industry can expect no let-up in regulatory scrutiny and legislative focus.
Meanwhile technological advancements and disruptive players entering the global markets space continue at pace, and established participants will need to adapt quickly to remain competitive.
If banks are to continue to deliver against heightened client and investor expectations, they will need to manage the ongoing regulatory demands in parallel to adopting transformative technological change.
Author: Joe Coquelin – Markets Strategy and Technology
Making Regulatory Compliance Manageable
Author: Graeme Duffy – Regulatory and Business Change
Regulation is important. It ensures the integrity, safety and stability of the Financial Services sector and ensures that clients are treated fairly.
The continued evolution (and turmoil) of the financial services industry, along with the emergence of digital assets, distributed ledgers, ESG etc, inevitably means one thing – additional and changing regulation.
Every global market is regulated by their local regulators, and typically there are similar requirements across common themes, albeit a few key regulators (typically US, UK & EU) tend to lead the way and other jurisdictions follow.
Data Analytics – Data, Data, Every Where…the Evolution of Data Analytics within Banking
We are a generation in the midst of Data Analytics evolution. Thanks to advances in technology processing power (Moore’s Law accurately predicted exponential growth) and the proven stability and efficiency of cloud-based platforms, powerful data analytics have become widely available to all. In banking alone, the data analytics industry is predicted to grow by a factor of 5 to 6 times over the next decade, with the wider industry being worth more than $330BN by 2030. Data is no longer considered the by-product of other systems and processes, it has rightly been recognised as the ‘life blood’ of organisations; fundamental to way we work and one of the keys to future success.
Author: Chris Hellings – Data Analytics and Business Optimisation
Managing Transformation Risk in an Agile World
Author: John McNiff – Risk and Control
Transformation risk is a transverse risk, which spans across multiple and competing siloed risks such as cyber, information security, regulatory compliance and legal.
As firms race to digitalise their processes and products using agile delivery methods, it becomes extremely challenging to control transformation risk in a consistent and efficient manner, across large-scale change portfolios. This is complicated further by data governance improvement initiatives and an increased uptake of external fin-tech and cloud solutions.
Business Optimisation – Improve Processes, Implement Strong Controls and Cut Costs
All organisations need to be cognisant of costs and financial institutions are no different. What is unique for this industry is the sheer number of employees needed to review, check and control the transactions that have been executed on behalf of a bank. Overlay this with high volumes of activity, multiple (ageing and new) systems and complex rules and regulations. You end up with a spaghetti of data to untangle, tame, process and control.
Banks must respond to shifts in policy or regulatory changes and withstand moments of crisis (financial crashes, COVID, war etc). So how can you improve your business process and reduce costs without losing control? Will your changes stand the test of time and be resilient enough in the future?
Author: Muoi Block – Data Analytics and Business Optimisation
The Race for Data – Electronic Trading in Fixed Income
Author: Mike Armer – Markets Strategy and Technology
Electronic trading is nothing new in products such as Equities, FX and even Government Bonds, but the more illiquid products have been traded traditionally until relatively recently. Corporate Bonds are one such product that have undergone significant changes in the way they are traded in the last 15 years. As a relatively illiquid, or scarce, instrument the customer would carefully consider which dealer to contact to enquire about a price. This would have been done via telephone, or the Bloomberg email or messenger service. It was simple, effective at the time, and required little in-house technology from the dealers or clients. Brokers would act as intermediaries between the banks to enable the dealers to de-risk following customer trades.
Following the Financial Crisis, banks found their balance sheets much reduced and this quickly became a problem for customers. The probability of calling a dealer to achieve an attractive price reduced substantially which led to the extra time burden of hunting around longer for a price and crucially the information loss, where the market becomes aware of what trades you wanted to do before you actually manage to execute.
Collateral Optimisation – Key to Increasing Business Capacity and Profitability
Author: Feroz Hoda – Client Strategy and Optimisation
Collateral optimisation is not a new topic but continues to feature regularly in discussions with our clients and the efficiency plans of many financial services firms. Initially the preserve of larger banks and collateral management platforms, the process can involve a wide range of activities that manage the sourcing and use of collateral in the most optimal way to meet a number of profitability, risk, liquidity and resource management targets. While many of the concepts are generally well understood, the practicalities of implementing a well-designed and structured process can become complex and require enhancements to data quality, technology platforms and business architecture to get the best results.
The Future of Crypo Assets and underlying Blockchain Technology
Author: Duncan Scott – Post-Trade Market Services
In a relatively short period of time, digital assets and block chain technologies have become the buzz of conversation, from coffee shop chat to mainstream global media channels. However, given the nature of these new concepts and technologies there are a great many questions to be asked and risks to be considered. We thought it would be helpful to explore the fundamentals behind these two topics and to expose some of the key areas of discussion.
Are you ready for UMR Phase 6?
Author: Duncan Scott – Post-Trade Market Services
If your response to hearing that there is an upcoming ‘UMR Phase 6’ is similar to that of the legendary film studio test audience who reacted to the title ‘The Madness of George III’ by complaining that they had missed parts I and II, then do not worry, here is your chance to catch up.
The Uncleared Margin Rules (UMR) were formulated in response to the financial crisis of 2008/9, when numerous counterparty defaults brought chaos to financial markets and threatened to bring the global economy to a juddering halt. By 2011, the G20 had agreed to add margin requirements to its programme of reform. The rules, which were formulated by the Basel Committee on Banking Supervision (BCBS) and the International Organization of Securities Commissions (IOSCO) were accepted by all major economies and have been introduced and enforced by national financial market regulators since they were finalised in 2015…
