Best newcomer (vendor or product): Broadridge

Operational Risk Awards 2017: Clients speak highly of unified post-trade management platform

OpRisk Awards 2017
Matt Pountain (left) and Paul Chambers, Broadridge

Effective post-trade logistics are vitally important to the health of a financial institution. Getting it right means a substantial reduction in operational and regulatory risk, not to mention costs; getting it wrong doesn’t bear thinking about.

The next-generation global post-trade management (GPTM) solution launched by New York State-based Broadridge Financial Solutions in May 2016 won plaudits across the board. What makes it unique, according to Matt Pountain, the firm’s head of product management for international post-trade, is that it is an entirely integrated solution through which the user can have a complete snapshot of the firm’s exposures across all assets and regions.

Hitherto, banks have tended to have various siloed post-trade platforms, each dealing with a specific asset or region or, indeed, division of the bank. What Broadridge offers is something different, says Pountain.

“The main benefit we offer is efficiency. Existing post-trade management tends to be fragmented across multiple platforms. This is not a very efficient use of a firm’s financial or operational resources. We can provide a centralised management experience in real time,” he says.

Broadridge is not a newcomer to the post-trade business: this has been its bread and butter for over 50 years, in fact, and it now processes over $5 trillion of equity and fixed-income trades per day. But the GPTM solution unveiled last year is very much a new product. It is designed to both streamline the post-trade business but also standardise it across all areas of a global markets business, including equity, credit, rates, foreign exchange, exchange-traded derivatives and securities financing. It hopes to add commodities in the near future.

The existence of multiple back-office siloes is not only costly and an inefficient use of capital; it’s also potentially more risky. Broadridge believes its unified management platform allows for more speedy and effective risk management as its users have to learn only one system.

“A big advantage of the single platform approach is that you’re in a better position to mitigate risks. If you have increased risk from growing numbers of unmatched trades in an Asian bond market you can redeploy staff from other areas, say, French equities, as that team uses the same platform,” says Pountain.

Similarly, the ability to move the firm’s financial assets around the world, seamlessly, to make best use of available collateral is hugely simplified on a single global platform. The GPTM solution provides unified post-trade management and processing for every trade over its complete lifecycle, thus allowing firms to gain greater control of their operations and the risks to which they might be exposed.

It’s also a flexible system. It can be fully outsourced or operated as an-house technology, which allows users to integrate it fully into their existing systems without the latter needing to be newly engineered.

The real-time view of realised and unrealised profit and loss across all asset classes gives the institution an unclouded window into exact exposures and risks at any time, enabling appropriate risk reduction decisions to be made, if necessary. It also identifies possible dangers using a series of key risk indicators which are colour coded red, amber and green to indicate their relative seriousness. All these key risk indicators for every aspect of the firm’s business can be displayed on a single dashboard.

Since its launch last May, three leading but unnamed financial institutions have chosen to use the Broadridge GPTM. Two of these picked it as the single solution for all their global fixed-income businesses, consolidating and replacing multiple platforms currently in use, while the third is using the GPTM to unify its equity and fixed-income post-trade processing in Europe, the Middle East and Africa, and some Asia-Pacific operations.

In September 2016, Broadridge added a cash management function to the GPTM, allowing financial institutions to manage cash, payments and foreign exchange transactions across asset classes and borders in real time. Once again, this is provided on an integrated basis, giving the host a single view of global trades and its cash position.

Banks need better post-trade systems not only because it enhances safety and diminishes risk; they need better systems because regulators are telling them they must. Regulatory bodies insist on a greater degree of transparency and more information about trading and exposure than ever before.

It would be foolish to assume that this trend is going to abate, even in the era of a new White House administration which aims to cut red tape for business. The pre-2008 world isn’t coming back and pressures of this kind are likely to increase rather than diminish. In Europe, Mifid II demands greater post-trade transparency than ever before

There are a lot of post-trade solutions out there which aim to meet this need. It is a thickly populated landscape. Yet Broadridge has made an impressive debut.

“We’re helping the industry to transform by bringing together multiple asset groups and regions on to a single platform,” says Pountain.

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