I recently participated in another Twitterview with DerivSource, who asked me several questions about transformations happening in the post-trade processing space. Within the context of regulatory reform, firms are recognizing the need to make changes to meet new rules, both those that have been identified and those still to be determined.
In the Q&A, we talked about data management, collateral management, approaches to regulatory compliance, and more. One of the most important ideas that came across is the concern that firms may be planning to respond to regulations one by one rather than equipping themselves with the ability to address multiple regulations in a flexible way.
If you missed the Twitterview, you can see the full back-and-forth with DerivSource here or you can search the #PTderiv hashtag on Twitter to find the full Q&A and add your own comments to the conversation.
TWITTERVIEW: TRANSFORMING POST-TRADE PROCESSING
DERIVSOURCE: With regulatory reform still in flux, how can firms start transforming post-trade processes to participate in the new OTC space? #PTderiv
TONY SCIANNA: Firms should take long-term view of regulatory reqs & impact on middle & back office, not just one-off challenges… Invest in #posttrade processes based on the big picture of increasing transparency & reducing systemic risk #PTderiv
DERIVSOURCE: What is the one post-trade ops area firms can start making changes to now to meet new regulatory rules and why? #PTderiv
TONY SCIANNA: No surprises from me: improving #datamanagement is the key to supporting regulatory demands. #PTderiv
DERIVSOURCE: What post-trade ops function faces the most significant transformation and why? #PTderiv
TONY SCIANNA: Hard to pick just one – data mgmt, #collateralmanagement, credit / risk mgmt, connectivity… New market structures, regulations, clearing of OTC #derivatives, etc. all require new approaches to #posttrade #PTderiv
DERIVSOURCE: Focusing on some specific post-trade processes, how can firms improve data mgmt in light of reg reform & new market structures? #PTderiv
TONY SCIANNA: Firms should be investing in capturing real time transactions across their disparate enterprise, standardize the data & … ensure the data can be readily accessible 24/7 for management reporting & any future regulatory demands #PTderiv
DERIVSOURCE: What about connectivity to new market structures like #SEFs #OTFs #SDRs & #CCPs? How can firms cope w/ connectivity complexity? #PTderiv
TONY SCIANNA: Ability to connect to new market structures, like data capture, must be flexible so firms can adapt to new requirements #PTderiv
DERIVSOURCE: Can firms process clearable #swaps and bilateral #derivatives in tandem efficiently? What are the challenges? #PTderiv
TONY SCIANNA: This is a challenge for back office ops. Firms will likely keep bilateral contracts & clearable swaps on separate apps… And all these applications will need added functionality for execution, matching &reporting #PTderiv
DERIVSOURCE: Collateral mgmt will transform in the new OTC #posttrade space. What is your customers’ biggest concern re: collateral mgmt? #PTderiv
TONY SCIANNA: A big focus on enterprise-wide collateral management &optimization will be crucial for market participants going forward… Firms will need a solution that allows them to select most efficient type of collateral to meet its collateral obligations #PTderiv
DERIVSOURCE: How can the CCPs help firms manage collateral when clearing various products across multiple jurisdictions? #PTderiv
TONY SCIANNA: The market requires additional clarification on what type of collateral will be eligible for use… by various CCPs before optimization strategies can be firmly established #PTderiv
DERIVSOURCE: Are you concerned about a ‘rush’ for technology from firms waiting for regulatory clarification before preparing post-trade ops? #PTderiv
TONY SCIANNA: Concerned about firms trying to respond to regulatory change 1 requirement at a time instead of preparing for the big picture… Firms must try to prepare for not just 1 rule but for ability to address multiple rules that will be introduced over time …#PTderiv
DERIVSOURCE: What is the biggest opportunity for the post-trade space in light of the regulatory change? #PTderiv
TONY SCIANNA: Reporting on transactions will be a necessity not just for bilateral contracts & clearable swaps but for all asset classes…#PTderiv
While you’re here…
- Read “Mixing Strategy with Practicality: Building a Post-Trade Operation for a New OTC Derivatives Landscape.”
- Explore solutions for solving middle and back office challenges.