This is especially true with the impending requirements of EMIR, regulatory reporting and the manifestations of Dodd-Frank, which are compelling companies to look at all their operational risk processes and systems.
Derivatives reconciliations for both ETD and OTC are getting more focus from operations and risk teams because they represent a core risk area for many trading businesses. This is especially true as more venues are launched and client segregation requirements begin to increase post-trade complexity. But is it possible to actually turn this burden into a competitive advantage? It may be.
Firms that embrace the change will be best placed to adapt the situation to their advantage
By adopting a “Get Recs Fit” approach in advance of these additional regulatory burdens, organisations can prepare themselves to be ready for new trading venues in shorter timescales and positioned so that reconciliations are no longer an impediment to gaining new business. The welcome side effects of streamlining of exceptions management and increasing transparency in positions across exchanges, client and instruments can be a significant reduction in costs as well as improved client service capability and business agility. Firms that embrace the change and use the demands of EMIR reporting and risk management to improve post trade processing efficiency in readiness will be best placed to adapt the situation to their advantage.