Treasury Technology Dimensions Tim Hart CFTP INFACT Consulting

Transcription

1 Treasury Technology Dimensions Tim Hart CFTP INFACT Consulting 27 August

2 Agenda! Drivers! Business Bias! Operating Bias! Technology Dimensions! Target Operating Model! Treasury Transitions! Key Technology Considerations! Four Dimensions 2

3 Drivers 3 Current and Future Impacts Regulatory - Trading/Pre Trade, the trading on exchanges and portals. Post trade - OTC Clearing and Reporting domestic and overseas markets, Principles for financial market infrastructures (CPSS IOSCO) impact on RITS. CVA risk capital charge of mark-to-market losses Regulatory Market Changes Technology Market Changes HFT, Dark Liquidity, Automated and Electronic Trading Venues and Portals, T+1, T+0 across all asset classes. Trading outside of institution infrastructure. Market Changes Data integrity and Risk e.g. APRA PPG 235 and this will have impacts outside of APRA regulated entities. Technology report production, integration with trade repositories, use of data warehouses, compliance tools, reconciliation, use of delegated reporting, T+1. Technology electronic confirmations and payments, use of SWIFT, systems certification. Collateral Management systems. 3

4 Business Bias 4 Regulatory Pre-trade Post Trade Data, Risk and Pricing Compliance and Reporting Operational and Cost Efficiency Reduce Treasury costs by straight through exception processing and reporting Create capacity and scale Electronic settlement and clearing Continuous Improvement Define Standard processes Train the Treasury organisation in processoriented thinking Instill a culture of continuous improvement into the organisation Risk Mitigation Ensure Consistent and auditable controls Align the Treasury Operating Model to changing regulations Robust and efficient reporting 4

5 Operating Bias 5 Business Process Integration Co-Ordination Treasury, Product providers, settlement and clearing providers, regulators Key platform capability: Easy access to shared robust data across pricing, risk, clearing and settlement Simplification Simplification of processes Use of business rules Examination of product set requirements Assess knock on effects Unification Enterprise-wide treasury and financial process standards and shared data Key platform capability: Standard business processes and systems for enterprisewide efficiency Technology Ease of change to meet changing regulatory and market needs Flexibility, real time, automated Focus on compliance Business Process Standardisation 5

6 Technology Dimensions! What has changed?! Issues with Monolithic Systems! Dis-aggregation of functions! Dealing with Pre-Trade and Post-Trade! Multiple approaches to pricing and risk! Significant growth in new vendors 6

7 Schematic FX Liquidity Trading Venues Corporate Treasury Settlement Clearing Reporting Banks Markets & Institutions Portals Institutions Market Data 7

8 Monolithic/Classic Systems Trade Capture Pricing Trading Risk Position Keeping Workflow Portfolio Management Credit Risk Market Risk Liquidity Treasury Sub Ledger Confirmations Settlement ALL IN ONE BOX 8

9 Dis-aggregated Systems Risk Market Data Pricing Workflow Static Data Sub Ledger Settlements Confirmations 9

10 Many Functionality Sources! Treasury! Risk! Pricing! Supporting Vendor Product Treasury Trading Risk Finance Pricing Market Static Data Banking Clearing Settlement Vendor A Product 1 Yes Vendor B Product 2 Yes Yes Vendor C Product 3 Yes Vendor D Product 4 Yes Yes Yes Vendor E Product 5 Yes Vendor F Product 6 Yes Vendor G Product 7 Yes Yes Vendor H Product 8 Yes Vendor I Product 9 Yes Yes 10

11 Functionality Sources! Source systems for functionality:! Trading portals (bank and client)! Treasury/Trading! Risk Systems! Pricing Systems! Accounting hubs! Settlement and Clearing! Workflow! As illustrated on next slide, functionality can exist in multiple system types 11

12 Operational Characteristics! These can be:! Classic in house! Classic hosted! Classic - integrated! Online SAAS etc.! Platforms, venues! Tools in house! Tools online! Open source 12

13 Defining Treasury s Target Operating Model 13 Concepts Reality Treasury Business Strategy Current Operating Model Target Operating Model Gap Analysis Close Gap Plan & Bus.Case Program of Work Implement Value Delivery The Operating Model aims to close the tactical gap between Business Strategy and the actual implementation. The Operating Model translates the strategic goals into clearly defined implementation target and aligns the execution process to the business value proposition, making the strategic concepts a reality. The Operating Model is the Treasury s Business Architecture. It is an integrated view of the People, Regulatory, Process & Technology requirements of Treasury. The Current Operating Model is the current view of Treasury s business architecture. It help us understand the baseline situation, identify improvement opportunities and constraints. The Target Operating Model (TOM) is the to-be view of Treasury s business architecture that captures all the improvement opportunities that are consistent with the Business Strategy. 13

14 Treasury Transitions 14 Risks Program Management Skillsets Migration & Transition Selection of Systems System Integration Architecture & Delivery Change Overload Poor Governance No business uplift from investment Mitigations Leverage external consultants & service providers Migration and Transition Plan Robust selection of best practice systems Target state integration strategy & plan Architectural & Delivery Framework Training & Awareness Program Sequencing & Phasing Robust Governance Frameworks for Architecture, Delivery, Resourcing & Change Ongoing Monitoring & Optimisation of Business Benefits from investment Continuous Improvement 14

15 Key Technology Considerations 15 Do Don ts Align business processes to new technology Drive the choice of the Operating Model based on how you want on p&l and b/s requirements Make the Operating Model language part of daily conversations Involve IT in the Operating Model decision making process Identify who will be accountable for designing and building the digitised platform Assume the business processes need to be the same Ignore real differences in the business Underestimate the task Make the Operating Model decision lightly Think that the Operating Model only affects Technology Ignore current and forward regulatory trends 15

16 Four Dimensions Current State Market Change Regulatory Change Future State 16

17 Delivery Model 17 17

18 INFACT Consulting 19