The client is a large asset management firm that manually handled Pre-Trade Compliance, Trade Booking, Confirmation Processing, and Post-trade workflow management for all derivative products (i.e. interest rate, fx and credit derivatives).  

Workflow: After the trader entered the trade details into a spreadsheet, it was sent to back office operations to ratify trade details. Once back office and the legal department had affixed necessary signatures, a confirmation document was faxed to the counter-party desk.  All subsequent trade-processing activities were handled via tactical desktop applications or manual processes. 

The firm decided to change their processes and embark on a Derivatives Roadmap to implement a front-to-back derivatives platform, in support of anticipated growth in the use of derivatives by multiple investment management teams.

As the financial industry became more competitive, the client needed tools and a platform to be able to provide superior returns on a risk adjusted basis. Senior management set strategic objectives geared towards a path of STP automation to increase sophisticated investment strategies associated with superior investment performance.

The solution implemented enabled the firm to trade its desired product set and drastically reduced the time required to handle workflow and clearing of confirmations for derivatives.  The number of unconfirmed trades by T+3 was significantly decreased by closing out most of its deals faster, and provided lower operational risk owing to near elimination of failed trades. The clearing of confirmations of past trades led to a huge reduction in credit risk exposure as well. The optimization carried out on existing transaction workflows minimized the amount of time consumed by the approval process of these instruments, and increased the firm’s flexibility in trading the products necessary to compete.

In addition, the newly installed vendor application is easily capable of handling the larger number of volumes sought by the derivative trading front office, and the increased volumes predicted in the future.  

• BROADER RANGE OF INSTRUMENTS SUPPORTED
  Previously, there was no support for the more exotic type of credit derivative and interest rate derivative products that are new to the market, thereby requiring the use of manual processing and its subsequent delays.
• REMOVED VOLUME LIMITATIONS
  The Derivatives business has witnessed exponential growth in volumes across vanilla and structured credit products. The existing processes were not designed to handle these large volumes, as a result of which many desired transactions had to be declined.
• INTEGRATION WITH DTCC/SWAPSWIRE
  There has been a proliferation of new vendors like DTCC, Swift and Swapswire, with several offerings in trading and risk management solutions. As part of the solution, the team enabled accessibility to these services  for credit and interest rate derivative trading.
• STRAIGHT THROUGH PROCESSING
  Team enabled Straight Through Processing (STP) of standardized trades, as well as provided semi-automation of complex derivative trades.
• OPTIMIZED WORKFLOWS
  The team optimized the existing workflows for confirmation and payments of many derivatives types used by the firm.
• SOX GUIDELINES COMPLIANCE
  The team ensured adequate auditing and control facilities were available within the vendor and integrated applications, in line with SOX compliance guidelines.