Post Trade Forum & Trade Show NH Danube City Hotel, Vienna

1. PostTrade Forum &Trade Show
NH Danube City Hotel,Vienna
Kerry Evans – 11th September 2015
Technology Challenges of
the new Regulatory
Environment

2. Seem Familiar?
TechnologyWeb for the good times

3. How about this?

4. And then came?

5. Regulatory impact analysis
We’ve all got one of these.
9
2015
7 365 112 4 1021011 6 78798 3 8 10412 9 11 95 7 1112 16 2 61152 31
2017
1 42 3
20182016
4 125108
31/8/16 FSB Phase 331/7/15 FSB Phase 2
1/1/18 IFRS 9 implemented
15/2/15 LCR deadline templates
30/6/16
AnaCredit Pilot
31/12/16 AnaCredit Compliance
30/6 /15 Remedial actions
AnaCredit
31/3/15 PoA DIV31/1/15 PoA DNB
At least 1 a year At least 1 a year
Stress testing
Regulatory Topic
1/1/16 BRRD Minimum Required own funds and Eligible Liabilities
1/1/16 BCBS #239 complianceBCBS #239
AQR Rem Actions*
Liquidity reporting 1/1/16 Daily LCR
FSB**
IFRS 9
30/6/15 New templates ALMM
FTP
BRRD
28/2/15 CRD IV aftercare
1/1/16 Set up IT/Information System
31/12/16 Equity Framework
30/4/15 LGD changes
30/9/15 CRM & Netting
1/7/15 Asset calculation IHCEPS
FINREP
1/7/16 Compliance with EPS requirements
31/12/15 Stress testing UAH21/7/15 Collins Amendment
Reporting on solo level (expected)
DPM 1/1/16 DPM 2.4
31/12/17 Securitisation Framework
1/1/17 DPM 2.61/7/16 DPM 2.5,1/7/15 DPM 2.31/1/15 DPM 2.2
COREP
1/7/16 Full MMS reporting1/4/16 Partial MMS reporting
1/10/15 New templates LCR
1/1/16 Apply SREP guidelines
At least 1 a year
SREP 13/4/15 SSM SREP
MMS
1/7/18 Net Stable Funding Ratio
At least 1 a year
* Solution DIV tbd
** Extension phase 1 tbd
Regulatory milestone Regulatory milestone, no fixed dateLegend

6. What Changed
Connect to new market places
Pre-trade checks
Transaction
reporting
Clearing
House
connectivity
Financial Reporting

7. Revenues and Regulations
Increased pressure on IT budgets
Technology debt observed in
2015 was largely caused by the
application of a series of tactical
bolt-ons or hacks to existing
software platforms, often
exacerbated by regulators
failing
to articulate, complete,
unambiguous, quantitative,
verifiable
requirements in good time. In
addition, our clients are in an
environment where business
leaders demand increased
reliability, flexibility and the
ability to quickly react to
requests. * Greyspark
JP Morgan, Citi, Morgan Stanley, Goldman Sachs, Wells Fargo, Barclays,
RBS, Lloyds, HSBC, Standard Chartered

8. 2008 -2015 –competing drivers
Cost saving and regulation
Regulators Required :
Collect and consolidate information, cross asset and cross business lines
More complexity, more systems, more costs.
Business Required :
• Reduce costs,
• Cut surplus systems,
• Restore profitability
• Support new business
models
Know More
Know It Better
Know It For Less

9. Crunch Point
How much can we consolidate ?
Front Office
Back Office
Front to Back
Risk
Finance
The whole lot ?

10. • Set your project up to succeed
• Senior management support
• The right delivery team
• Business IT Partnership
• Stages for funding and delivery
• Strong project disciplines
• Short delivery cycles
• BE PREPAREDTO CANCEL
• Pick your vendor carefully
• Product scope
• Credible road map
• Accessible skills in market
• Focus on the benefits
• It’s not all about IT – 95% is good
enough
• Business processes – fit the system
• Business compromises (out of the box
functionality)
• IT - 95% is NOT good enough
• Actually retire your systems.
• Focus on the quality
• Management reporting
• Decision making
• Deployment and support
• Plan, measure, report, replan
What do I need to consider?
On average, large IT projects run 45 percent over budget and 7 percent over
time, while delivering 56 percent less value than predicted. * McKinsey

11. • Change lifecycles for the future
• Front office changes vs. Risk System
changes
• AvoidVersion Drift
• AdoptVendor releases and adapt
business processes
• Rebalance of system ownership
• More partnership (& more
committees)
• Wedded to one supplier
• 20 year relationship
• Concentration of suppliers
• Not many offering credible options
• Price of entry for competitors
• Standardisation
• Common business processes
• Common technological skills
• Common risk models
What are the implications?
How could a monolithic IT architecture impact my business?
For My Firm For the Industry

12. Standard platform
Discrete flexible components
(open source ?)
Standard inter-process
communications
No-one is offering – although
some of the elements exist
Is there an alternative?
Can I fight the fashion
Outsourced entirely
Fully standardized platform
Fully standard processes
The utility solution
Coming soon from a vendor near
you