This event will take place at The Convene Center, 101 Park Ave, on Tuesday 17 March 2020.
The panel session, which commences at 10:55, is entitled: ‘ESG and Impact – can tech help tell fact from fiction’.
BITA Risk’s award-winning wealth management software has specific capability for ESG Management.
BITA Risk is shortlisted in the Compliance category.
The event will be held on Wednesday 18th March 2020 at the Mandarin Oriental, 80 Columbus Circle at 60th Street, New York, New York 10023, USA.
COLWMA recognises the high levels of service and quality present in the UK’s Wealth Management sector. These Awards are highly valued and unique as it is the investors themselves who vote to determine the winners in each category.
The event will be held at the Guildhall, Gresham Street in London at 6.30pm. For further information please visit:
www.goodacreuk.com
Every failed trade will have a price tag from February 2021.
Although the Central Securities Depositories Regulation (the “CSDR”) came into effect on 17 September 2014, its operational impacts on buy and sell-side firms is just coming into focus. In particular it is the Settlement Discipline Regime (SDR) element of CSDR that will have the most significant impact on market participants.
The SDR reform stipulates that trading venues and investment firms must implement measures to prevent and address failures in the settlement process. Every failed trade will cost businesses. Where a settlement fail does occur, CSDs must impose cash penalties on failing participants. The basis of the penalty is determined by the number of business days beyond settlement date that a transaction remains unsettled. Over and above this, there will also be a mandatory buy-in process for failed trades and the recovery of the costs will be passed on to the defaulting party.
In other words, increased settlement discipline and the avoidance of failed trades is now business critical, not a nice-to-have.
One may ponder, when so much automation has been successfully introduced into middle and back office processes over the years, how it is that failed trades have slipped through the net? How have failed trades become the last bastion of non-automation?
It could be argued that current penalties are not significantly punitive or material to attract focus and investment in this process. With the introduction of the new penalty structure, however, non-compliance could result in significant monetary and reputational cost. In a sense, therefore, failed trades were not the highest priority; SDR will have a substantial impact as it formalises the settlement process and gives failures added significance.
Another factor is SWIFT messaging. This communication method has been available for many years yet has not been adopted in its entirety. The custodians instead have often provided failed trade reports, either through portals or daily spreadsheets. The problem here is that all those portals and spreadsheets are different, with the result that the buy- and sell-sides would assign multiple resources to manually process numerous failed trade reports and rationalise them as best they could. The custodians had little incentive to introduce standardisation, hence manual workarounds were commonplace.
In operational terms, there are several obstacles that the industry must overcome in order to effectively deal with SDR.
Firstly, the industry must minimise the cost impact of buy-ins. Trade failures will often occur in illiquid markets where there is a shortage of stock. If a firm is receiving buy-ins in illiquid markets, potentially there could be some large price differentials at a ‘Buy-in-Auction’ at the end of the day. In these circumstances, the premiums levied by empowered sellers are generally significant, leaving the counterparty at fault and with a painful variance.
Secondly, firms must reduce the manual processing stemming from SDR. This labour-intensive administration is likely to include extensive effort associated with buy-ins. It’s not just a case of sending an email; asset managers, for instance, may need to start cancelling trades, rebooking trades, pursuing the brokers for all the fines and so on. The introduction of SDR will mean that businesses will have to deal with far more manual workarounds.
Thirdly, operational teams must prove that they are in control of the settlement process. These teams will now need to report in more detail to senior management on unsettled trades and counterparty exposure. One of the key observations from the Lehman collapse was the lack of information regarding consolidated counterparty exposures. The new SDR regime, while imposing penalties, has the benefit of reducing settlement exposure and cash management for all parties involved in the trade cycle.
In summary, the most significant changes being made through SDR is fining firms, introducing rigour around buy-ins and reporting the worst offenders. All firms need to proactively prevent trade failures, understand their exposure to unsettled trades and protect their company’s reputation. SDR means asset managers and brokers must move nearer to real-time monitoring, compelling them to transition up the settlement cycle and adopt a pre-settlement mentality.
Just looking at trade fails is not solving the problem.
Paul Bowen
Senior Executive – Operations corfinancial
info@corfinancialgroup.com
Although well over ten years ago, many people still vividly remember the immediate chaos during the financial crisis. Firms were scrambling to understand counterparty exposures and settlement risk, along with a key requirement to know the exact state of asset and cash positions. Executed transactions sitting between trade date and settlement date fell into deep voids where the status, even post-settlement date, was not absolutely clear. It took many firms days, sometimes even weeks, to piece together a conclusive picture of the actual situation.
With multiple industry utilities, a plethora of systems and with transactions recorded in multiple mediums (including paper tickets ‘enhanced’ with coloured marker pens, faxes and spreadsheets) it swiftly became clear that such an environment only works when the outside world cooperates. Post-crisis, sanctions were introduced to impose responsibilities and liabilities upon firms, with the aim of firms having more control of transaction data. Equally, lucidity in post-trade processes supports the maintenance of IBOR platforms that also require near real-time position data. Can a company therefore survive without a transparent post-trade system? The regulators would say ‘absolutely not’.
The upcoming enhancements to the Central Securities Depositories Regulation (CSDR), which must be implemented by February 2021, pushes the responsibilities even further. In particular, the Settlement Discipline Regime (SDR) within CSDR means that where a settlement fail does occur, CSDs must impose cash penalties on failing participants, as well as compulsory buy-ins after a short time. The impact of this change will only add to reputational damage for parties that are unable to apply effective measures and controls.
I would argue that a better level of post-trade transparency brings challenges but also opportunities for the industry as a whole. Depending on the definition of transparency, additional controls and processes improve the ability to monitor the settlement status of a transaction and reduce exposure to settlement risk.
It’s time to shine a light into the dark corners.
In this issue you will be able to read about our business plans for this year and exciting new product developments. These developments include a ground-breaking solution to the Settlement Discipline Regime as well as enhancements to BITA Risk (associated with key industry issues such as ESG).
Click the NEWS to read now.
Corfinancial, a leading provider of specialist software and services to the financial services sector, has been chosen by technology and services innovator Archer to provide Archer’s investment management clients with advanced portfolio and model construction through the integration of corfinancial’s BITA Risk suite of products.
In recent months, Archer has integrated the BITA Wealth solution in the services offered to new and existing Archer clients, seamlessly weaving Model Overlay Management, Portfolio Risk, Style and Factor Analysis together with its existing middle office technology solution. The BITA Risk suite adds the functionality wealth managers require to assess investors’ attitudes and needs related to risk, match that to the firm’s investment offerings, model the proposed portfolio, issue the proposal, and monitor against that proposal.
“Broadening the suite of capabilities available to investment manufacturers through our integrated platform has been an important strategic initiative for us,” said Bryan Dori, Archer CEO. “The BITA integration is one of the ways we’re helping our clients add significant value in their relationships with investors.”
Daryl Roxburgh, Global Head of BITA Risk, said: “Archer is a key player in the US investment management services industry, with a robust suite of services efficiently executed via its premier cloud-based platform. BITA Wealth compliments Archer’s capabilities and adds a significant set of functions for the CIO, Advisor and Compliance and Governance teams within an organisation.”
The BITA Risk team secured the honors for ˜Best risk profiling solution (for the fifth year in a row). The shortlist for this years risk profiling award was fiercely contested – BITA Wealth Profiler ultimately triumphed with its ability to make the client mandate a living document rather than a static filed paper, embedding it within the daily management of the client portfolio.
BITA Wealth Monitor was also awarded the ˜Best implementation of a technology solution trophy for its successful deployment of BITA Wealth Monitor for Quilter Cheviot. Daryl Roxburgh, Global Head, BITA Risk said: BITA Wealth Monitor provides investment managers with an extensive overview of their portfolios and helps in addressing any issues easily and efficiently, within an automated process.
My team has moved from a labor-intensive monthly monitoring cycle to getting the information they and our investment managers need to see every day, said Nick Herbert, Head of Investment Risk at Quilter Cheviot.
With client AUM in excess of $212bn, BITA Risk is the leading provider of integrated Private Client suitability profiling, portfolio management, risk and monitoring applications in the HNW and UHNW sectors. It gives managers freedom within a framework to construct and manage portfolios in the context of risk, policy and mandate, so they achieve suitability whilst delivering control and transparency to management.
Through partners in the BITA eco-system, our clients can access market leading GIPS compliant performance and attribution, Financial Planning tools and Business Process Outsourcing in the USA and UK.
After a detailed market evaluation process, Baillie Gifford selected corfinancials post-trade solution salerio to automate its global trade processing.
“Baillie Gifford is unique in the UK in being a large-scale investment business that has remained an independent private partnership. This ownership structure has allowed us to keep our efforts focused entirely on our clients and their investments,” said Louise Laidlaw, Head of Settlements at Baillie Gifford. We decided that it was time to transition our existing operating model to a strategic solution that encompassed the whole trade processing lifecycle. Not only were we looking for a comprehensive, automated exception management system, but also the right people to work with.
Bruce Hobson, CEO at corfinancial: “Today, investment management organizations are under increasing pressure to reduce risks, cut costs and bring efficiencies to post-trade processes. Baillie Gifford recognizes the benefits that straight-through-processing and scalability can deliver in helping the firm serve its growing international client base.”
BITA Risk, a leading provider of wealth management solutions to the financial services marketplace, today announced a strategic partnership with First Rate to provide enhanced performance, ex-post and ex-ante risk and portfolio analysis, and portfolio modelling tools to the wealth management sector. The partnership will enable First Rate’s ex-post performance, risk and attribution data in addition to client reporting to be accessed through BITA Risk’s portfolio management solution, BITA Wealth, and for that application to be available to First Rate’s clients through their current channels.
“We believe that it will be a step change to be able to bring the opportunity of full GIPS compliant performance analysis to our clients,” said Daryl Roxburgh, Global Head of BITA Risk. “The combination of First Rate’s ex-post and BITA Risk’s ex-ante gives the manager a clear view of where their clients have been and where they are going, together with BITA Risk’s portfolio analytics to help them understand why.”
Partnership highlights:
“Firms will be able to access our combined solution through First Rate service bureau or other outsourced providers, First Rate managed hosting service, or via a deployed solution, catering to the firm’s individual needs,” said Deborah Repak, Managing Director of Global, First Rate. “We are already working together on our first mutual client and see a great opportunity in bringing First Rate and BITA Risk platforms together in a way that benefits wealth management professionals.”
The strategic partnership with First Rate builds further the BITA Risk ecosystem as it integrates data and services from leading providers into its multi-award winning innovative wealth management application. BITA Risk’s strategy is to deliver industry leading client, investment, risk management and monitoring solutions to the manager and the enterprise.
Contact First Rate today to learn more about the partnership between First Rate and BITA Risk. For more information about First Rate, please visit www.FirstRate.com.
First Rate exists to help wealth management companies grow and thrive as stewards of their client’s investments. Our reporting solutions help financial firms create absolute transparency while empowering investors to simplify and better understand their financial world. For BITA Clients: First Rate currently provides services to over 500 firms with $2tr AUM.
You can learn more about First Rate here.
BITA Risk is a leading provider of specialised wealth management risk and suitability management software tools and is part of the London headquartered financial services software group, corfinancial.
You can learn more about BITA Risk here.
