SunGard’s own Brenda Mickiewicz, senior manager of analyst relations, sat down with Kevin to ask him about his views on data management, risk strategies, OTC derivatives, and the benefits of regulatory reform developments. Kevin mentioned several points that echo my own sentiments:
One of the biggest goals of financial regulatory reform is transparency, and a significant part of that is data. Kevin says that where you get it, who you get it from, and what you do with data are all important. I agree. The need for accessible, enterprise-wide data is key; however, the quality of the information is the most critical factor to satisfying new regulatory demands on a global scale.
To say that regulatory reform is incredibly complex would be an understatement. Reading about it in the news only conveys a surface understanding of its complexity; when you speak with the person responsible for one specific area at a firm and hear about his or her unique challenges, then talk to another person in another area, you begin to see how complicated the regulatory changes are going to be since they span so many previously separate departments. Implementation simply cannot be rushed – the changes are too all-encompassing.
Regulatory compliance projects will lead to many innovations. With sweeping changes on the horizon, capital markets firms will seek new ways to gain a competitive edge. As Kevin says, this will open up opportunities to innovate across all aspects of financial technology. Our automation and processing expertise in listed instruments is already being utilized in the OTC area. Some of our customers are even leveraging geographical advantages. We are committed to being a part of this industry innovation partnering with our customers who areleveraging our expertise across the globe.
With the road to regulatory reform continuing to be an uncertain one, speaking to industry experts like Kevin can help you understand how best to capitalize on change. Listen to this podcast on regulatory reform and respond with your own questions about the challenges and opportunities that lie ahead.
As we continually work to help our customers capitalize on change, we have identified 10 key trends shaping the securities finance industry today. I wanted to share these trends here as they appeared in our recent announcement.
Jane Milner, head of strategy for securities finance and collateral management in SunGard’s Capital Markets business, said, “The securities finance industry continues to transform in the midst of a slow economic recovery and impending new regulations. Customers are demanding greater transparency, consolidating systems to increase efficiency and reduce costs, and improving their processes in order to better leverage their securities finance business.”
The ten trends SunGard has identified as currently shaping securities finance are: Read more»
In the video below, my colleague Ted Allen and I answer several questions about enterprise collateral management. We’ve seen this issue become incredibly important in the wake of new regulations and its impact on costs and liquidity. Of course, enterprise collateral management and collateral optimization mean different things to different organizations, but as I say in the video, “The bottom line is it’s all about cost: holding down costs to be able to increase revenues, because clearly in today’s environment, that’s key to success.”
One thing in particular that struck me is our regulatory vocabulary. If you stop and think about it, it is remarkable how powerful words actually are. The words we use to define and think about these complex issues can not only help us make sense of the regulatory changes but also complicate or confuse.
Author: Marcus Cree, vice president, risk solutions, SunGard
I spent Monday, June 20 at SunGard’s New York City Day. This year’s event brought another full house, with a provocative keynote speaker and an afternoon full of industry debate and questions.
Not surprisingly, regulatory reform dominated many of the presentations throughout the afternoon and found its way into most of the conversations in the networking sessions. Neither Barney Frank nor Chris Dodd was at the Waldorf-Astoria that day, but their long shadows certainly were.
From wealth management to capital markets risk, discussions concerning the new regulatory framework – including its impact on derivatives, portfolio management, market liquidity and the cost of being in business – ran through the event presentations, panels, attendee questions and working groups. There was a great deal of conversation about the move to central clearing, and the impact it would have on swap volumes, market liquidity, collateral requirements and risk concentrations.
The most interesting aspect of SunGard’s New York City Day for me was the willingness of so many industry representatives to share their concerns, expectations and best practices. It is clear that the industry as a whole is facing up to the challenge of interpreting the rules and looking to establish frameworks that achieve both the letter and spirit of those rules.
As SunGard supports our industry partners in all areas of the financial markets, there were many timely topics covered across the board, but the underlying and connecting theme of the day was clarifying the new regulations. So at the end of the day, even though Meredith Whitney gave an excellent keynote speech, and we heard valuable presentations from speakers like the CFTC’s Scott O’Malia, the DTCC’s Larry Thompson, and analysts from TowerGroup, TABB Group, Aite Group and Finadium, I believe Chris and Barney stole the show in New York!
As global regulators introduce new rules and market changes, banks are feeling pressure in every area of their business. One in particular is around collateral management and optimization. A huge liquidity strain and increased demand for collateral assets have brought collateral management to the top of banks’ agendas. But, what is the right collateral management approach in this new regulatory environment?
To answer this very question, we recently published a whitepaper titled Taking the Strain. It outlines a best practice approach to collateral management and optimization.
To respond to new demands, your firm needs a consolidated view of the collateral available across each and every business line. You also must assess the relative costs and quality of all collateral to best match the available assets for each transaction. In short, what your firm needs to know about collateral is this: to better optimize collateral usage, you must take an enterprise-wide approach.
An enterprise-wide approach to collateral management can provide a variety of benefits, from reduced operational risk to better liquidity management, a cross-enterprise view of counterparty risk to funding cost control. This approach also allows for comprehensive reporting to satisfy both internal demands and regulators’ transparency requirements.
Now, as you read through Taking the Strain, try to answer the following questions: Does your firm have a global, holistic, real-time view of all collateral? Are you taking the technological, operational, and cultural steps to optimize your collateral? I look forward to seeing your thoughts in the comments section.
Author: Jane Milner, market specialist, securities finance, SunGard
It is a shame Greek philosopher Heraclitus is unable to see and comment on today’s rapidly evolving financial industry. Despite the hundreds of years between his life and present day, Heraclitus’s famous quote, “the only constant is change,” still rings true. And today we are seeing this all around us from a securities finance perspective.
For the securities finance world in particular, the task at hand is laying the framework to address our changing environment. Amidst this whirlwind of change, I see three key concerns for our industry:
Redefinition: The aftermath of crisis is changing the dynamics within the securities finance market; redefining the role of market players, affecting organizational structures are resulting in changes to business processes along with supporting systems. For instance, we are seeing traditional institutional ‘long’ funds going short and hedge funds sitting long. Do you see opportunities to capitalise on change here?
Regulation: New regulations are undoubtedly top-of-mind for firms in every area of the financial market. For securities finance, the impact is not yet fully defined. Increased transparency, greater risk monitoring and controls will certainly be needed to meet these challenges. Will your firm be ready for new regulation?
Risk mitigation: In response to increased investor scrutiny as well as impending regulation, there is a mounting need for enterprise-wide views of risk, providing greater transparency for both clients and regulators. Innovative approaches to risk and collateral management are emerging; both for risk mitigation and enhanced asset utilisation in response to increasing Balance Sheet pressures. Are you well positioned to manage collateral on an enterprise-wide basis?
We will be delving into these topics further at SunGard’s upcoming Frankfurt City Day on 11 May. I hope to see you there to discuss the ways in which securities finance can capitalize on change. If you are finding today that Heraclitus was right – that the only constant is change – register here to join us in Frankfurt for this timely event.