OTC Derivatives market reforms are supported by all G20 countries and in time, perhaps the goals of increased transparency and liquidity can be achieved along with reductions in counterparty and systemic risk. However, fund managers must make decisions today about how to comply with these regulatory challenges which will have immediate and strategic impacts on their businesses. Regulatory change presents opportunities to optimise derivatives operations.
New requirements are extensive, with comprehensive reporting and reconciliation demands. Swaps are becoming increasingly popular as an investment strategy and need to be considered in future operations requirements. It is an opportune time whilst implementing central counterparty workflows and other OTC market reform changes to improve the end-to end process. By proactively responding to the new business environment and effectively structuring their OTC derivatives business, institutions can take advantage of opportunities, protect franchise value and avoid the potential downside of these changes.
A well thought-out operational strategy will mitigate regulatory risk and offer the opportunity to implement a more streamlined infrastructure. Effective automation is key, using existing systems to achieve a rapid response to new investment strategies and trading new instruments, with derivatives based investment strategies requiring integrated cross-asset class processing from front to back offices.
Learn more about the state of OTC market reform and discover our views on how to streamline derivatives operations
Optimising derivatives operations to help meet regulatory challenges (Chinese version)