Client Story
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 include the following:
- Vendor-built, -supported, and -hosted
- Scales with trading volumes
- Cost- and resource-efficient
The chief administrative officer engaged Cutter Associates 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 skill 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