Problem
In today’s international business environment, a combination of a global client base and overseas operations requires the firm to be an over-the-counter (OTC) derivatives end-user. Since 2013, this has led to a need to meet a growing set of regulatory requirements, far outside their core business focus.
The firm was initially striving to meet regulatory requirements for portfolio reconciliation. Like many other corporates, these non-core business requirements were first dealt with at arms-length, by outsourcing the requirement to a service provider. While this enabled the firm to meet its baseline requirements, their experience was that this still created effort on their side to provide input when differences arose.
On top of the unexpected efforts, over time this created its own set of problems since they ran into challenges providing the necessary transparency to auditors to ensure they were regulatory compliant. Achieving the level of required compliance was found to be both a timely and manual process.
With the introduction of the uncleared margin rules the firm faced an expansion in regulatory requirements. They had the option to either pass this to their outsource provider or re-evaluate their ability to bring it in-house.
Solution
The firm decided to bring the portfolio reconciliation and margin functions in-house. This decision was reached as it was determined to be the best option to improve their overall risk mitigation and reduce costs.
They undertook a review of available vendor platforms and quickly selected triResolve Margin. They found it to be easy to use and fast to implement—critical factors for any organisation, but particularly important to a non-bank with a small staff.
On top of this, they found it gave them a fully integrated means of dispute resolution and would allow them to meet audit requirements using standard triResolve reports.
The triResolve service management team was able to help the client easily switch from their service provider to triResolve Margin. The team assisted the client with key transition tasks, including:
Data mapping and setup of reconciliations versus counterparties
Setup of collateral agreements
Margin calculation testing
On-boarding and connectivity to dealer counterparties in AcadiaSoft’s MarginSphere
The switch from using a service provider to bringing in-house via triResolve was completed in days, and the triResolve team provided training and transition support for the entire process.
The key objectives for the client were reduction of cost and control over a growing set of processes; all of which they achieved quickly and efficiently.
Going forward they look to take advantage of standard triResolve Margin automation rules—enabling them to reduce manual effort and focus on resolving disputes.
