Minium, IBM and Promontory release joint white paper
19 February 2018 London
Image: Shutterstock
Firms must invest in expertise and reshape their business models to manage the level of regulatory change, according to a white paper, jointly published by Minium, IBM and Promontory.
The white paper, titled ‘The Way Ahead for Derivatives Clearing and Prime Services’, discusses some of the key challenges faced by the sector, such the cost of operational processes, the ongoing wave of new regulations and their impact on existing systems, as well as how new technology can provide firms with an advantage to increase their market share.
The white paper explained that to face these challenges, business should consider four steps to help them explore new geographies, refocus on new businesses, and invest in new technologies.
These include ensuring that forthcoming financial regulations are “fully understood and their impact on existing systems is clear to firms”.
Firms should also, according to the white paper, “review issues with current systems to understand whether a modular replacement approach could yield significant business benefits”.
It also suggested that financial services should also ensure that “a plan is in place to prepare for new technology ecosystems” and “devise a strategic plan to replace antiquated technology stacks, perhaps, via a modular approach”.
The white paper explained that the investment in new technology is, inevitably, the way forward and that firms should embrace application programming interfaces (APIs), cloud computing cognitive processes and blockchain.
It suggested that an API can “eliminate redundant processes” and cloud computing “provides firms with access to vast amounts of computing resources without them having to physically own servers, write code or set up any networks”.
While cognitive processes “use computer models to simulate human thought processes to help analyse regulatory text to identify any obligations and assess the adequacy of their compliance programmes”.
The white paper stated that firms should use blockchain to “enable the secure flexible, low-cost management of secure value transfers across a global business footprint”.
In the conclusion, the report said: “[We] believe that there is an opportunity for firms that provide clearing and prime services to take a quantum leap forward by investing in new technologies that are tailored for modern businesses and aligned with the current regulatory environment.”
They added: “A system capable of ensuring a single source of truth with real-time trade information that can be shared internally across all functions could significantly increase the profitability of clearing and prime-services.”
The white paper, titled ‘The Way Ahead for Derivatives Clearing and Prime Services’, discusses some of the key challenges faced by the sector, such the cost of operational processes, the ongoing wave of new regulations and their impact on existing systems, as well as how new technology can provide firms with an advantage to increase their market share.
The white paper explained that to face these challenges, business should consider four steps to help them explore new geographies, refocus on new businesses, and invest in new technologies.
These include ensuring that forthcoming financial regulations are “fully understood and their impact on existing systems is clear to firms”.
Firms should also, according to the white paper, “review issues with current systems to understand whether a modular replacement approach could yield significant business benefits”.
It also suggested that financial services should also ensure that “a plan is in place to prepare for new technology ecosystems” and “devise a strategic plan to replace antiquated technology stacks, perhaps, via a modular approach”.
The white paper explained that the investment in new technology is, inevitably, the way forward and that firms should embrace application programming interfaces (APIs), cloud computing cognitive processes and blockchain.
It suggested that an API can “eliminate redundant processes” and cloud computing “provides firms with access to vast amounts of computing resources without them having to physically own servers, write code or set up any networks”.
While cognitive processes “use computer models to simulate human thought processes to help analyse regulatory text to identify any obligations and assess the adequacy of their compliance programmes”.
The white paper stated that firms should use blockchain to “enable the secure flexible, low-cost management of secure value transfers across a global business footprint”.
In the conclusion, the report said: “[We] believe that there is an opportunity for firms that provide clearing and prime services to take a quantum leap forward by investing in new technologies that are tailored for modern businesses and aligned with the current regulatory environment.”
They added: “A system capable of ensuring a single source of truth with real-time trade information that can be shared internally across all functions could significantly increase the profitability of clearing and prime-services.”
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