Spring 2015 Edition

  • 881

    Metrics Trend Report Q4 2014

    Since 2005, Sapient Global Markets and Markit have worked together to provide the G15 banks with global derivative transaction metrics for the over-the-counter (OTC) Derivatives Regulators’ Forum chaired by the Federal Reserve Bank of New York. The dealer group community utilizes this data to increase operational efficiency, along with verifying the ranking within the group and evaluating trading activity. The key metrics encompass OTC derivatives transaction volume and electronic processing of trade confirmations and measures the time delay in issuing trade confirmations. In this article, Aaron Gill and Vassil Kirtchev provide the Q4 2014 metrics and associated highlights. The industry’s [...]
  • 867

    WIND DERIVATIVES: has their time come?

    The Internal Energy Agency (IEA) estimates that wind will generate 18% of the world’s power by 2050—equating to approximately 2800 gigawatts (GW) as compared to current generation of about 300 GW.1 This growth in wind power will have a significant impact on the grid infrastructure, power systems, policies and electricity markets. Kevin Casey, Shailesh Joshi and Shahid Intekhab discuss the need for wind-related products/derivatives to manage risk across all aspects of the wind economy, including generation, trading, distribution and project financing. How Renewable Power is Changing Electricity Markets On Sunday, October 4, 2009, at approximately 3:00 AM, the German Power [...]
  • 844

    MAXIMIZING FLEET UTILIZATION: a critical strategy for today’s crude shipping market

    The traditional method of transporting crude is via pipe, but crude by rail has boomed over the past several years and more firms continue to join the crude by rail shippers list. In this article, Carolyn Barless and Karen Lukacs discuss the impacts of increased production, crude by rail volumes, and upcoming tank car safety regulations on traditional fleet management. All are leading to increased costs, tank car supply shortages, and more complex utilization decisions. As energy firms face tighter profitability, they will need to take a deeper look at more in-depth analysis and reporting tools for the management and [...]
  • 739

    INFORMATION INDUSTRIALIZATION: digitizing business relationships for energy companies

    Large-scale uncertainty, regulation and shifts in the competitive landscape are placing enormous pressure on energy firms’ existing operating models. In this article, Rashed Haq discusses an approach for “information industrialization” to help energy companies more effectively compete and thrive: harnessing modern information technology and adopting lean operating principles to create integrated, inter-company workflows across the energy value chain. The energy markets have experienced large-scale uncertainty over the last five years, driven by the dichotomy of a dramatic increase in supply from shale and renewables, and declining demand. Unprecedented midstream investments have created infrastructure changes, and the competitive landscape is shifting for [...]
  • 692

    Building a Content-Rich Fund Website that Performs: 5 essential components of an asset management website

    Digital has transformed how prospective investors discover and evaluate products and services. A well-designed website that articulates the brand and makes it easy to find product information is at the core—and it is no longer simply “a nice to have.” In the article below, Mash Patel and Jeff Hendren from Kurtosys, a Sapient Global Markets strategic partner, outline five key considerations for investment manager web sites. In January 2013, Cerulli looked at marketing and branding in fund management. Their research cited strong client service, a recognizable brand and an effectual website as the three most important factors potential investors use [...]
  • 680

    BCBS-IOSCO: increasing the margin period of risk

    As the CCP market continues to expand, with clearing houses offering an increasing number of clearable securities and netting efficiencies, there is an increased focus on the fate of over-the-counter (OTC) derivatives that are as yet unclearable. These bilateral trades will be subject to the BCBS-IOSCO Initial Margin (IM) requirements, scheduled to phase-in from September 2016. This will result in higher IM costs, primarily as a result of the increased Margin Period of Risk (MPOR). The baseline MPOR for a netting set (i.e., a portfolio with a counterparty under a legal netting agreement) is 10 days, but under certain conditions [...]
  • 598

    Portfolio Reconciliation: why an industry utility makes sense

    As over-the-counter (OTC) trade reporting is being implemented around the globe, concerns about the accuracy of the data being reported are growing among market participants and regulators alike. In fact, both the US Commodity Futures Trading Commission (CFTC) and European Securities and Markets Authority (ESMA) stipulated that institutions must establish processes to identify and monitor disputes for bilateral trades, creating an urgent need for firms to be able to identify and resolve any data discrepancies. In addition, trade repositories (TRs) are expected to perform inter-TR and intra-TR reconciliation and potentially extend this service to participants. In this article, Dheeraj Joshi [...]
  • 538

    Success Factors of an Industry Utility: an interview with the European DataWarehouse’s Markus Schaber

    Following the 2007/2008 economic crisis, there was an increased need to improve transparency and restore investor confidence in the European securitization market. In 2009, the structured finance industry, spearheaded by the European Central Bank (ECB), came together to address the problem. Their efforts resulted in a vision to create a European central data repository that would offer visibility and timely access to standardized loan-level data provided by originators to all market participants. In 2010, the ECB took the next step by announcing its intention to establish loan-level data requirements in order to pledge ABS as collateral in the Eurosystem. Today [...]
  • 437

    The Rising Cost of Trade Reporting: can firms afford to stay compliant?

    Now that most G20 member states have mandated trade reporting of derivatives, market participants have an opportunity to evaluate the agility and sustainability of their current approach. In this article, Randall Orbon, Arun Karur and Cian Ó Braonáin discuss the state of trade reporting and show how growing costs, complexity and regulatory scrutiny are fueling a compelling business case for third-party managed solutions. To address the trade reporting requirements outlined in Dodd-Frank and EMIR, many organizations made significant investments in internal systems. Now additional regulations and further enhancements—including MiFID II/MiFIR and requirements in other regions—are poised to effect more change. [...]
  • 261

    THE NEXT PHASE OF OUTSOURCING: “change the bank” with digital transformation

    Financial services firms have always faced market volatility, but new challenges are forcing most to rethink their traditional operating models in favor of outsourcing. In this article, Sean O’Donnell reviews the drivers of change for financial institutions and how the expanded use of outsourcing models will help improve revenue and create new business opportunities. Over the past five years, global capital markets have experienced unprecedented change. Today, increased regulations, more reliance on technology, reduction in revenue and a greater need to aggressively target new business while still reducing costs have forced all participants to reassess their strategies, operating models and [...]