Investment banks face many changes in the OTC derivatives market, least of all new central clearing and exchange-trading models. But that’s not all—the entire value chain is evolving, and forcing banks to adapt accordingly.

Rebuilding the value chain

Many banks are focusing on how they can deliver value-added services, including:

  • Pre-trade services
  • Intelligent routing and transaction-cost optimization enabled by swap execution facility (SEF) aggregation and central counterparty (CCP) selection
  • Automated matching and affirmation
  • Consolidated clearing confirmations
  • Integration with CCPs and trade repositories
  • Integrated risk management, collateral management and collateral transformation offerings

Large banks may be able to build out a full-suite of capabilities in-house, but smaller competitors will probably focus on a few, aligning with partners to fill in the gaps. Whatever route your business takes, it is important to ensure that offerings are tailored to client needs and can adapt to changes in customer preferences and regulations.

Join me next week as I share three ways that investment banks can adapt their operating models to maintain competiveness.

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