SECURITIES FINANCE. Repo, Securities Lending Collateral Management targit - all rights reserved

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1 SECURITIES FINANCE Repo, Securities Lending Collateral Management

2 Where do we go in Securities Finance? Risk, regulatory and standardization EMIR, BASEL III, UCITS, AIFMD, MIFID II, Working Group on Margin Requirements, FUNDAMENTAL REVIEW OF THE TRADING BOOK, ASSET ENCUMBRANCE, NSFR, LCR, ILM, T2S, CCP, CVA, OIS Drivers like those put increased load on flexibility of business and demand changes in the world of trading, processing, valuation and reporting and they offer benefits to those taking the chances Liquidity management and funding needs Funding and liquidity management became more challenging and more expensive for financial institutions since 2008 Spreads are low and revenue generation is increasingly a matter of flow business and collateral optimization across fixed income and equities classes, domestic and international Consolidation and synergy Cost cutting all over the place enforces consolidation of processes and IT systems as to realize synergetic potential Securities Finance today Must contribute to a highly integrated collateral liquidity and risk management Those challenges are asking for a strong partner 1

3 Comprehensive experience for cross asset challenges targit provides in depth expertise We cover securities finance processes as well as repo, lending, collateral management, risk, accounting, settlement, reconciliation and electronic trade confirmation systems Therefore your evaluation, enhancement or implementation project will benefit from our experienced, well-thought and cost effective work We support you in areas like Business Modelling, Business Consulting, Project Management, Vendor Systems and Infrastructure, Products and Tools, Operations 2

4 Business modelling targit supports all market participants in the securities finance market Buy side institutional investors Sell side banks Corporate treasuries Custodians and Clearers Brokers and ATS targit consults business and IT management towards definition and implementation of cost and business efficient solutions targit works out individual business architectures by convergent collaboration with core business departments, cross functions and IT units by planning and realizing business, operational and technical structures for securities finance processes 3

5 Business consulting targit offers lead assistance for functional design and for the adaption of specific business processes in all areas of securities finance 4

6 Project management targit takes responsibility for successful realization of securities finance projects through management of project goals and stakeholder interests certified and experienced project managers applying expert functional and technical know-how for securities finance and all associated processes and workflows 5

7 Vendor systems and infrastructure targit supports securities finance projects by providing complete consulting and integration services market, process and systems analysis, design, specification, implementation, custom developments, test and support integration to markets, clearing and custody such as EuroClear, Clearstream, JPM, BoNY, Eurex, BrokerTec, MTS, LCH.Clearnet, EquiLend/BondLend, Pirum and others implementations of Anvil, Apex, Calypso, 4sight, Sophis and E2E integration with backoffice, accounting and risk processes and IT 6

8 PnL valuation sample PnL valuation Advancing from plain MM discounting, Securities Finance PnL can be determined by an improved Mark-to-Market approach, which may utilize: Cost-to-Close regarding ISIN used in deal Repo/Lending Curves (GC, Special) OIS curves and discounting Optional CVA, FVA adjustments Decomposition into subresults such as FX, IR, price, commission PV 1 = DF from Repo Curve (GC, Special) on RepoCash in deal PV 2 = DF from Repo Curve (GC, Special) on virtual RepoCash determined by Cost-to-Close of ISIN position PV 3 = DF from uncollateralized OIS Curve for Cash Delta (1,2) to Maturity PV (deal) = (PV 1,2,3 ) (PnL illustration sample) 7

9 Accounting tool Securities Finance FO/BO Functional design and implementation of an application framework for Enrichments Transactional Events and Data Booking Engine Postings Instructions Settlement and Accounting a flexible workflow engine for accounting postings of all repo and securities lending transactions and their lifecycle events a scheduler for settlement and payment legs holding relevant booking data to maturity (incl. post maturity archiving) sychronization and reconciliation with FO, BO, risk, settlement and accounting systems defining accounting entries depository enhancements and generation of settlement and payment instructions Instantiation example: Java object concept and threading, GUI for monitoring and controlling, XML, XSD, XSLT, SOA compliant service configuration, RDBMS (e.g. Oracle, Sybase), flexibly integrated toolbox (Unix, Linux, Win) 8

10 Confirmation, claiming and invoicing tool The CMS toolbox Integration of RepoSecLend into a Confirmation Management System generic confirmation management with intelligent and flexible workflows coverage of securities finance, bonds, equities, OTC derivatives online synchronization with master agreements and annexes data creation, transmission and matching for pre-confirmations and confirmations a procedure for invoicing and escalations handling Legal Framework Application Online query and posting of legal framework reference data onto confirmations Trade Backoffice Trade Events CMS Status Oasys Fax mail SWIFT Markit Wire T-Zero Instantiation example: Java object concept and threading, Windows client for monitoring and controlling, SOA compliant service configuration, RDBMS (Oracle, Sybase and others), flexibly integrated toolbox (Unix, Linux, Windows, Standard channel adapters). CMS is a client driven application development done by targit, based on a 3rd party document management software nucleus 9

11 Selected client projects targit has proven experience in securities finance projects Rebuild of Repo and Lending P&L calculations, incl. enhancements to curves, Cost-to-Close, % DivReq Development of APEX Jasper Reports for FO, BO, Risk, Accounting and Regulatory departments Implementation of APEX for Equity Finance, incl. testing, reporting and interfacing Implementation of ION Anvil Repo/Lending Trading System including ongoing release changes F2B reconciliations using SunGard Martini and Securities Office Functional specifications on Equities Finance and EqD Tax Monitoring (over dividend) for ION Anvil and Sophis Evaluation of processing and P&L booking for internal Repo and Lending transactions Development of a new FX liquidity solution for repo/lending coupon, dividend and manufactured payments Reconciliation for Repo and Lending economic PL versus accounting results (HGB, IFRS) Functional design for the new implementation of securities finance functionality into the DECIDE F2B trading & risk system Development and implementation of a cashflow and event based booking system for Repo, BSB and Lending Connecting EquiLend to the ION Anvil Repo/Lending Trading System Business Modelling for Agency Lending at a Custodian, using Peplum accounting and settlement system Setup of Cash Rebates, ALD, Dividend PnL and Tax Claims for Equity Finance using Merit, ION Anvil, EquiLend Developing business objects reports for SunGard Martini Consulting and support for SunGard Martini Repo/Lending Front- and Backoffice 10

12 Contact Peter Schönberger Principal Capital Markets targit GmbH München * Frankfurt * Wien * Zürich Ridlerstraße 31b D München tel fax mobil mailto: [email protected] 11

13 targit mission statement targit is a highly specialized consulting and IT services company in financial markets located in Munich, Frankfurt, Zurich and Vienna - with about 60 highly skilled and experienced people targit supports banks, exchanges, brokers, investment companies, asset managers, custodians and industrial companies in all financial market related tasks and the implementation of systems from front office to back office targit s business activities range from strategic and functional consulting over development and implementation of solutions to their test, support and maintenance targit business solutions are an asset for our customers based on our threefold expertise - business, application and IT targits strategic competitive advantage originates from its independence as well as from project and product oriented partnerships targit - large enough to deliver. Small enough to care. 12

14 targit clients & partners (digest) 13

15 Your success is our goal targit GmbH targit GmbH targit GmbH targit GmbH Ridlerstraße 31 b Berliner Straße 44 Walfischgasse 8 Rüdigerstraße 17 D München D Frankfurt am Main A-1010 Wien CH-8045 Zürich Telefon: Telefon: Telefon: Telefon: Telefax: Telefax: Telefax : Telefax: [email protected] [email protected] [email protected] [email protected] 14