OTC derivatives reforms will likely result in increased competition and transparency, and smaller margins. Amid those market conditions, operational efficiency and differentiation are critical for success. Here are three capabilities that can help investment banks get there.
Driving operational efficiency
Operational efficiency is not only crucial for success, but meets increasing client demand for seamless, end-to-end service across all offerings. Successful banks will integrate clearing and settlement by processing payments automatically between client, bank and central counterparty (CCP). Another example is integrating collateral management with broader risk management processes, which can enable banks to better calculate and manage margins across all asset classes and legal entities.
Differentiating through client focus
The customer is king, and banks must deliver exceptional client service. To do so, they need:
- A streamlined onboarding process that is integrated across all asset classes.
- Dedicated account managers with cross-asset knowledge of clearing sales and operations.
- Efficient platforms with client-to-bank interconnectivity.
- Sophisticated client reporting tools to manage different collateral and margin scenarios.
Enhancing organizational and technical agility
Many of the specific regulations of OTC derivatives reform remain unclear, only underpinning the need for investment banks to be flexible and agile. Banks must be ready to adapt quickly—a capability that requires agile technology. This includes flexible, scalable and interoperable platforms that can enable a bank to grow with the market and adapt to evolving infrastructure.
To learn more:
- Read Part 1: New paradigms in the OTC derivatives market.
- Read Part 2: Rebuilding the OTC derivatives value chain.
- Download Staying ahead in Derivatives: Preparing for SEFs and Clearing to Go Live (pdf; opens in a new window).