Jun 21, 2022


Our client's use of derivatives has increased significantly over the last several years and is expected to continue to grow both in terms of volumes and complexity. The core of the client's operating model is built around BRS' platform Aladdin, along with a heavy reliance on Microsoft Excel. Trading and operations teams have introduced several vendor technology solutions to support derivatives processing, including: MarkitWire, GTSS, TriOptima, and Acadia. In addition to adding technology, the operations team has adapted workflows and organizational structure as a reaction to the complex derivative environment. ​

The investment manager engaged Cutter Associates to help assess the current derivatives support environment along with the systems and tools used to support derivative processing. Additionally, based on the current-state assessment, business process mapping, and a targeted peer analysis, Cutter provided a document focused on future-state recommendations and areas for improvement covering Organizational Structure, Organizational Governance, Business Processes, and Technical Support & System Functionality. A roadmap for proposed project areas, as well as supporting business case materials, were also prepared.​

Cutter Solution

Cutter’s discovery process involves meeting with business & technical support staff to examine processes, systems, tools, organizational structure, and skill sets. Detailed business process mapping of 11 discrete business process across different derivative instrument types (Futures, FX, Bilateral & Cleared Swaps) exposed opportunities for process efficiency and the existence of many supplemental End User Computing tools (EUCs) to support Aladdin functional challenges (significantly more than the client's Aladdin peers). ​

We offered 22 recommendations wrapped into the following six themes: ​

  • Improve the operational governance framework: develop robust automated business operating metrics, enhance existing vendor management & technical enhancement practices, and better leverage BlackRock expertise​
  • Improve onboarding transparency: develop new onboarding criteria to ensure the impacts and challenges of custom/bespoke processing requirements is understood​
  • Introduce operational efficiency projects, while increasing project capacity by expanding business and technical project teams​
  • Ensure regulatory reporting data integrity and compliance: enhance the collaboration between internal teams and implement technical enhancements to help collect data and format reporting​
  • Enhance the global support model with regional teams to support trade operations and confirmations, and take advantage of centralized offshore processing teams which can better leverage the global clock​
  • Realign, consolidate, and refine the Derivative Operations organization to optimize talent and efficiency across the teams ​

Cutter proposed the client partner with BRS to pursue a targeted improvement initiative to address current system challenges, improve inefficient workflows, and better manage future needs before evaluating best-of-breed supplemental tools.​

A roadmap was provided to offer a high-level overview of projects with supporting business case(s) were developed to help assess benefits such as efficiency gains and reduced operational risk, while helping to detail project costs, timelines, resource requirements, and risk factors.