Foreign Exchange and Money Market

Foreign Exchange and Money Market
Operations
Industry Trends and Challenges
In the last decade the Foreign exchange and money markets have undergone significant changes. Volume growth and emergence of new
class of investors is now making FXMM instruments a distinct asset class. FXMM is now seen not only as a hedging instrument but also as
a specific class of asset for trading and speculation. Last decade also has seen emergence of hedge funds and retail investors as key contributors to demand. Cross border investment activity has also resulted in increasing demand for FX instruments. Wide spread usage of
Electronic trading networks and innovative trading strategies necessitated changes to infrastructure, workflows and overall resiliency of
IT systems. These key trends are shaping new approaches to risk management, collateral management, regulation and client servicing.
Success of FXMM operations is heavily contingent not only on a scalable, reliable system but also on controls and risk management features these systems provide. Reducing Cost per trade and improving STP rates continues to be high on the agenda for bank executives
as the industry adopts a commoditized operations model and the variety and the complexity of the products / instruments increases.
Risk management and compliance to new regulations without escalation in costs continues to shape not only investments in the new
systems but also the back office operations. These challenges are driving Change The Bank (CTB) initiatives to focus on optimization of
existing operations infrastructure and workflows, increased adoption of outsourcing and off shoring strategies, and underlying platform
improvement.
Cognizant’s Capabilities across Foreign Exchange and Money Market Operations
Cognizant has strong experience of supporting marquee clients across instruments and products in the FXMM operations. Cognizant
provides 85% offshore coverage for FXMM Operations of a leading investment bank, making this engagement one of the largest
third party outsourcing operations.
Middle and back office experience:
Checking with Counterparties/Clients for Trade confirmation for open trades within timelines
Confirmations
and settlements
Ensuring on-time and accurate payments as per market cut-off timelines and Capturing all SSI
updates that are received from Clients/Agents
Investigations for re-effecting duplicate payments, Updating Omgeo alerts
Reconciliations
Reconciliation between Front Office and Operations systems, Internal Books and passing of Internal
Ledger and Journal entries
Reporting and clearing of breaks, investigating Non-Receipt/Non-Payment cases
Liaising with Business for P&L write offs and Maintenance of Suspense account
Compute and make Margin calls for counterparties
Margin
Management
Managing fails and interest processing
Prime Brokerage Margins: Approving payments, Setups, Exceptions Processing, Margin calls,
Pricing issues management
Dispute
Management
Trade reconciliation with clients and managing all types of portfolio disputes
Identification/ resolution of Valuation differences and Unmatched trades
Valuations: Prepare statements for clients and counter parties
Valuation and
Accounting
Daily P&L Generation – reconcile between risk management system,
ledge and P&L, review balance sheet movements, preparing trader packs
Review attributions, book accruals and allocations
MIS Reporting
and Control
Timely Reporting of Trade Volumes/STP/Clearance/Outstanding etc.
Weekly KPI performance reporting
Reporting of Basel II items and Impact resolution of Outstanding
Clients serviced
Inter Banks
Corporates
Hedge Funds
Pension Funds
Fund Administrators
Broker/Agent Banks
Products supported
T-Bills,
Commercial Papers (CPs),
Certificate of Deposits (CDs)
Unsecured Loans & Deposits
Reverse Repos
Swaps
Foreign Exchange: Forwards,
Spots, NDFs/NDOs
Money Market
Vanilla Options
Precious Metals Options
Regulations Confirmed
Collateral and dispute
management
MAS
HKMA SEC
Fed Reserve
FINMA
Confirmations,
settlement and recon
BAFIN
FSA
SEC
MAS
Product control
SEC
FASB
FSA
IASB
Research capabilities:
Basic
Maintenance &
Designing
Analysis/
Brief write-ups
Data monitoring & tracking news from various sources to analyze the impact on
FX and commodities under coverage
Economic calendars (Weekly, Monthly), building data models and update periodically
Creating reports which include technical analysis on FX and precious metals
(Daily, Weekly, and Quarterly) and writing commentary on various economic releases
and implications in different markets
Products Supported
Geographies
FX Perspective
Morning Advisor
Weekly Calendar
Emerging Markets Navigator
Emerging Markets- India Nutshell
Data Sources
Asia
Europe
US
Bloomberg
Thomson Reuters
Haver
Yield book
Eqargs
Change – The – Bank (CTB) Focus
Cognizant delivers significant benefits to clients through CTB initiatives by leveraging deep operations experience, a pool of techno
functional CTB Consultants and Lean six sigma experts.
Below table summarizes some of the benefits we delivered through CTB initiatives to our clients.
Theme
Impact
Consolidation
45% productivity benefits through various process improvement projects for past 3 years notably through
consolidation of operations into a single 24x7 team. This allowed for benefiting from cross team buffers and
effectively managing spikes in specific instrument volumes
Standardization
80% reduction in failed payments and claims by standardizing operations across instruments and products
Tool implementation
Error Financing Costs brought down by 96%. This was achieved through standardization of error codes and
implementing a CRM workflow tool. Set up a Zero tolerance group that identified error patterns and worked with
operations team in bringing down the errors through personalized improvement plans and feeding CTB initiatives
World Headquarters
European Headquarters
India Operations Headquarters
500 Frank W. Burr Blvd.
Teaneck, NJ 07666 USA
Phone: +1 201 801 0233
Fax: +1 201 801 0243
Toll Free: +1 888 937 3277
Email: [email protected]
1 Kingdom Street
Paddington Central
London W2 6BD
Phone: +44 (0) 20 7297 7600
Fax: +44 (0) 20 7121 0102
Email: [email protected]
#5/535, Old Mahabalipuram Road
Okkiyam Pettai, Thoraipakkam
Chennai, 600 096 India
Phone: +91 (0) 44 4209 6000
Fax: +91 (0) 44 4209 6060
Email: [email protected]
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