Overview
Our client is a component of one of the world’s leading global financial organizations with its own assets under management of over USD 130 billion. The firm offers a wide range of single-country, regional, and global capabilities across public and private equity, fixed income, and commercial real estate, delivered through a diverse set of investment vehicles ─ i.e., retail funds, institutional accounts, ETFs, UCITs, and SCAVs.
The firm’s expanded use of derivatives in its European market product offerings, as well as the requirements under FINRA Rule 4210 ─ collateralization of TBA agreements ─ have increased its operational complexity.
The firm was seeking a collateral solution that would had the following:
- Vendor-built, supported, and hosted
- Scales with trading volumes
- Cost- and resource-efficient
Cutter Associates was engaged by the chief administrative officer to evaluate and validate the firm’s initial vendor selection, provide derivative subject matter expertise, and lead the project and implementation of a collateral management solution.
Cutter Solution
Cutter partnered with the key business and technology stakeholders of the portfolio management, operations, legal, and technology teams to perform the following:
- Vetting the client’s selection for capability, compatibility, and value
- Providing derivatives and collateral management subject matter and industry-leading practices expertise
- Evaluating the firm’s current skills set and resource capacity, identifying gaps, then working with management, devising actionable strategies to address those gaps
- Acting as both project manager and project leader
- Identifying and addressing tangential process improvement opportunities
Cutter’s in-depth knowledge of derivatives and collateral management, as well as its breadth of vendor application implementation experience, played a significant role in ensuring a successful solution that exceeded the stakeholders’ requirements.
As a result of this project the client achieved many benefits, including the following:
- A solution that utilized existing staff resources ─ i.e., no additions to either operations or IT support staff required
- A scalable solution that accommodates both trading volumes and product variety
- More transparent derivatives and collateral reporting
- Increased skill set of staff