Asset managers look forward to grow their Assets Under Management (AuM) through acquisition strategy and marketing/distribution efforts. To cope with the regulatory tide, they need to focus on their Management business and thus, to accelerate the outsourcing of their Middle-office functions. Mutualizing their platforms with Tier2/3 players could also be part of their strategy.
Listed below are some of your new challenges:
Our consultants have been working at the heart of these transformations and can help you take on these new challenges. Listed below are some of the many expertise Aurexia consultants have to offer but are not limited to:
Compliance departments are extremely busy implementing remediation plans and upgrading their Financial Security schemes. To respond to this, the function must accelerate its transformation and the integration of technology with a dual objective: the first is to reduce growing costs in response to waves of sanctions or threats of sanctions issued by regulators (ACPR, BCE and DoJ for instance) and the second is to significantly improve the management of available data to better understand and anticipate patterns of financial crime. Compliance has become a key function in the financial industry, but one that is costly to manage, often because of tools and processes that are supposed to do the job largely but are not calibrated well enough to really meet business challenges. While remediation plans continue, Compliance departments are beginning to take a step back and question the effectiveness of their business model.
Aurexia is a partner in this new trajectory:
Our consultants have been working at the heart of these transformations and can help you take on these new challenges. Listed below are some of the many expertise Aurexia consultants have to offer but are not limited to:
Wealth Managers have to deal with a tough context of low rates, growing burden of regulations, fierce competition and clients requirements. Revenues models have been shifting from inducements to transparent fees. The knowledge of client is crucial with high level of performance for relationship managers, and smart innovative solutions. Growing the AuM and Mutualizing the cost of platforms with mergers and/or outsourced process are also strong challenges for private bankers.
Listed below are some of your new challenges:
Our consultants have been working at the heart of these transformations and can help you take on these new challenges. Listed below are some of the many expertise Aurexia consultants have to offer but are not limited to:
Over the past few years, regulators have been increasingly specific and strict on electronic and high frequency trading regulations. Setting up a fully compliant electronic trading control framework has proven to be a real challenge for banks, not only because of technical complexity but also of the numerous principles and regulations that must be taken into account.
What is the compliance level of your current electronic trading control framework and how can we help you review and adapt it?
What are the IFRS 17 challenges that you will have to face?
The IFRS 17 accounting & reporting standard was launched in May 2017 after almost 20 years of development.
It provides new accounting principles for the insurance industry and aims at ironing out inconsistencies of the past between main market players. Most importantly, IFRS 17 will drastically change the way insurers determine liabilities and provisionsfor insurance contracts and calculate their resulting income statement.
The new standard will enable investors to meaningfully compare market players, and has already triggered huge organization, process, data and IT projects within the industry.
This article will give you a clear understanding of IFRS 17 principles and a comprehensive view of the main project challenges that insurance companies are faced up with.
For this upcoming Aurexia Digital Game, you can expect to discover concrete solutions for real business use cases in a fun and interactive way. More details will be provided soon and don’t forget, this is a contest thus the winning team will stand to win a prize!
Banking & Insurance | CLIENT SERVICING | Play. Share. Innovate.
As a part of new culture and conduct regulations, individual accountability has been a key area of focus globally since 2016. First Hong Kong and now Singapore, guidelines and regulations are being released, leaving only a few months for the banks to comply.
What are those requirements and how do they impact you? How can we ensure you a full and timely compliance, while management change effectively?
The Global Financial crisis has caused concern about standards of conduct within the financial services sector. These standards of conduct are sometimes described as values, professionalism, culture and ethics – but the idea is the same and has to do with strengthening finance by means other than regulation.
As a result, regulators and industry specific associations have been issuing conduct guidelines, calling for banks to set-up internal corporate code of conducts. Are your currently thinking of changing or building your conduct framework?
Regardless of how current Brexit negotiations progress in Brussels between the United Kingdom (UK) and the European Union (EU), Teresa May’s government will start to issue next month some instructions to UK-based companies on the actions they need to take in the event of a no-deal Brexit. Even if no-deal had the lowest feasibility probability among all the different scenarios financial institutions tried to price, this eventuality is growing.
As the clock runs down, it appears vital to get a refined view on what sort of impacts the actors currently involved face in what we could probably call an upcoming new European banking union landscape.
Historically considered as one of the largest global financial centres in the world, how financial trades will occur in London next April 1st, 2019?
What is sure is that all the different steps of a transaction will be affected, from trading to execution, booking, clearing and reporting: nothing will be the same anymore as the whole trade workflow could heavily get impacted.
It starts with all the pre-trade aspects, where a London-based sales representative could not be able to pick up the phone to an EU client at all, as under MiFID II directive the reception and transmission of orders in relation to one or more financial instruments is considered as a regulated investment service. In case of no-deal, all UK-based banks will lose the EU’s passporting rights, hence could not be able to operate those services unless some specific agreements are found.
Because legal regimes are different from one country to another, most EU countries require a UK dealer to get a licence if its salespeople want to serve clients in that jurisdiction. That is why we are currently seeing some banks reorganising themselves and moving out some sales representatives in its European entities to carry on serving EU clients hence avoiding licencing burden.
Same thing from a legal papering perspective, in case there is no equivalence after a no-deal where EU clients deal with UK-based dealers, all the contracts (incl. ISDA contracts) will need to be repapered and signed with EU legal entities dealers to be able to serve EU clients.
Once the previous pre-trade aspects will get resolved, banks will have to deal with execution issues and the back-to-back trading techniques. Today, when a dealer enters in series of trades with EU clients, it usually books all these positions in a local trading book to be able to offset them more easily and to enter mirroring internal trades to transfer the risk of such positions to a London based trading book. With passporting rights lost, European Central Banks (ECB) made it clear that the EU entities will have to retain some risks instead of sending them all back to London. That means that EU entities will have to scale up their balance sheets to get the additional sum of regulatory capital required for retaining such risks. Tomorrow, the way in which the booking model will be defined to support the booking and the risk management of transactions undertaken with EU clients will be the main driver of impacts for banks.
Also, truth to be told, some liquidity issues could appear soon, especially with products that need to be executed electronically on Multilateral Trading Platforms (MTF) / Organised Trading Facility (OTF) like swaps that needs to satisfy MiFIR’s electronic trading requirement. Today, dealer-to-client trading is dominated by two London-based MTFs: Bloomberg and Tradeweb. In case of a no-deal scenario, those platforms will lose their EU authorisations, hence, they both decided to set up entities in the Netherlands. And Amsterdam is not a random choice, simply because this EU country offers a more flexible jurisdiction that can allow a non-EU dealer to respond to quote requests and execute on its platform (country’s overseas persons exemption runs in the Netherlands). Depending on licenses equivalence, EU clients could need to be onboarded on both UK and EU MTFs to get access to the full range of products they currently deal with to overcome liquidity dry-up of such required products.
The current commercial battle we can witness between main UK (e.g. LCH.Clearnet) and European (e.g. Eurex) Central Counterparties (CCPs) confirm that the legal access to clearing solutions post-Brexit is key in the current negotiation. CCPs process most of the world’s trade in the $530tn market for derivatives contracts, cushioning their users from the risk of default and associated legal and trading problems. Regardless of Brexit deal outcomes, the UK and EU regulatory bodies recently decided to temporarily allow banks and companies on both sides to use UK/EU-based clearing houses without specific permission. Still, post-temporary permissions, some agreements between both jurisdictions will need to be agreed on in order to find equivalent recognitions between UK and EU CCPs. Post-Brexit, LCH.Clearnet which currently dominates the interest rate swaps clearing business could lose authorisation to clear for EU clients if no equivalency status is found by becoming a third-country CCP. Hence, EU clients could have to clear new trades locally and remaining existing positions in the UK, splitting their positions between several CCPs, drying up liquidity and incurring extra margin payments for their fragmented positions, and increasing associated capital costs.
Another main impact of Brexit could be found around the activity of transactions reporting via Trade Repositories (TR) and Automated Reporting Mechanisms (ARMs). As the main principles of the European Market Infrastructure Regulation (EMIR) and the Markets in Financial Instruments Regulations (MiFIR) regulations will still be valid in a no-deal Brexit world (until arrangements between jurisdictions are found), existing architecture workflows to report transactions to EU regulators will be affected. A TR is an entity that centrally collects and maintains the records of over-the-counter (OTC) derivatives, under EMIR in Europe. DTCC, which holds data for around four-fifths of the global derivatives market and currently UK-based, set up an office in Dublin to ensure that post-Brexit, its EU clients will be able to carry on complying with their EMIR duties. Same challenges will apply to ARMs logic where some arrangements to obtain EU authorisation are required to carry on servicing EU clients.
Despite temporary permission regimes appearing on both UK and EU sides regarding certain trades’ aspects, all the financial actors in the industry are impacted including sell and buy-side, brokerage companies, trading venues, clearing houses and servicing firms. A disorderly exit from the EU clearly increases the risk of a serious breakdown in cross-border financial services in March 2019, especially regarding the normal continuity for financial operations lifecycle.
