Counterparty risk product of the year: Moody’s Analytics

Asia Risk Technology Awards 2020

Pierre-Etienne Chabanel, Moody's

With coverage encompassing the Basel II and III reports for over 50 different jurisdictions, Moody’s Analytics provides holistic solutions for its counterparty risk management needs. Its RiskAuthority software and Banking Cloud Credit Risk software-as-a-service (SaaS) solutions enable banks to comply with both current and upcoming regulatory capital requirements.

Pierre-Etienne Chabanel, managing director of product management at Moody’s Analytics, describes the firm’s solution as “regulatory-compliance-as-a-service”, all taking place over the cloud, with a focus on fast deployment and cost-effective measures.

“Our software is always up-to-date with the latest regulatory requirements,” he says. “We’ve also invested in cloud-native technologies to easily scale our services and benefit from the unlimited computational power available on the cloud. This investment lets us provide the regulatory analytics and reports our customers need rapidly and cost-efficiently.”

Its July 2019 launch of a new risk calculation and reporting engine – ‘Banking Cloud Credit Risk’ – secured Moody’s Analytics as a true leader in this space. This platform allows banks to stay up-to-date with the latest regulatory requirements.

One Asia Risk judge noted that “the Banking Cloud Credit Risk solution features good innovative ideas on functionalities and provides seamless calculation and reporting workflow. Quality of service and relevance in Apac are key differentiation with other vendors.”

On the other hand, the RiskAuthority solution addresses Basel III rules – both those that have already been implemented and those that will be coming into effect by 2022 – in addition to the Capital Requirements Regulations from the EU’s European Banking Authority. The RiskAuthority solution was recently enhanced to address new regulations in addition to software updates to support the regulatory capital treatment of securitisation exposures, leverage ratio disclosure requirements, large exposures framework and the output capital floor under Basel III.

The focus on cost reduction and better service for its customers is at the heart of the firm’s solutions for delivering, maintaining and updating regulatory reports in the cloud. Chabanel explains how, “with our solutions, customers are always current in complying with the latest version of their local regulations. They can redirect their internal resources to improve the quality of the data they submit and generate more effective analytics and reports using our solution. They can be confident in meeting regulatory deadlines, managing their risk, and making better, faster business decisions”.

Its cloud-based, cutting-edge technology ensures fast and scalable solutions that can be easily integrated within a bank’s larger software ecosystem. Combined with Moody’s Analytics’ extensive regulatory expertise, clients are assured that they are always up to date with their regulatory compliance. The firm’s holistic ‘comprehensive compliance’ methodology tackles governance, ensures auditability and offers validation capabilities, helping clients with full end-to-end coverage.

Moody’s Analytics says that, over the past year, it has continued to invest in counterparty credit risk (CCR) regulatory solutions to address regulatory updates.

“We offer our software over the cloud and provide APIs to rapidly assess the impact of new trade on bank portfolios’ regulatory metrics,” says Chabanel. “We enhanced our software to comply with new Basel III requirements such as the standardised approach for counterparty credit risk (SA-CCR) regulation to evaluate CCR exposure metrics used in regulatory capital, large exposures and ratio reports.”

The focus on in-cloud delivery is a key differentiator, which makes the Moody’s Analytics solutions particularly helpful for its clients as it means that banks opting for this model don’t need to invest in on-premises technical infrastructure.

“As a result, they can significantly reduce the total operating cost of the solution and the time required to comply with shifting regulatory changes,” says Chabanel.

Looking at the Asian markets in particular, Chabanel explains how “we have customers in many Asian countries, so we have adapted our solutions to national discretions and regulatory reporting requirements for SA-CCR. We support each country’s unique requirements and have customers operating under SA-CCR in Singapore, Hong Kong, China and Australia.”

SA-CCR has been implemented in certain Asian countries before taking effect elsewhere.

For the Asia Risk judging committee, Moody’s Analytics stood out as a clear winner for the counterparty risk category.

As one judge said: “Broadly speaking, the key for me was the maturity of the solution and its relevance/applicability to critical business problems. The nature and scale of regulatory change is so significant that capability in the area of regulatory analytics is becoming a strategic commercial advantage.”