Media Coverage

July 2015

FSB highlights trade reporting problems,
Markets Media, July 27, 2015.

The Financial Stability Board, the international body that monitors the global financial system, said authorities have challenges accessing, using and aggregating trade reporting data. The FSB said in its ninth progress report on implementing over-the-counter derivatives market reforms that the availability and use of trade repositories and central counterparties continues to expand, particularly for credit and interest rate derivatives. However the report said: “Challenges, such as authorities’ ability to access, use and aggregate TR data, persist.” In the EU and US there are three or more TRs are available to accept reports in each asset class while in other jurisdictions there are typically one or two TRs available to accept reports in each asset class. 

Algorithmic trading: Understanding the double edged sword, Business Insider, July 23, 2015.
Of late there has been considerable attention directed towards algorithmic trading, and the value and risks it brings to markets. Let me begin by describing what algorithmic trading is. Let us assume that a share of Reliance is available for Rs 1000 in National Stock Exchange (NSE), while it's available for Rs 999 in Bombay Stock Exchange (BSE). I could write a computer program, that buys any share from a cheaper location (BSE in above example), and sell at the costlier location. The program will keep generating buy and sell orders and I can make money out of any price difference, without spending any of my own time. Such orders that are automatically generated from computers are called algorithmic (or algo) trades. Algo trading has been around for many years now, and has been evolving with increasing power of computers, lower latency networks and ever smarter programmers coding them.

NYSE Outage Aftermath Barely Registers, Markets Media, July 22, 2015.
Almost two weeks on, the outage that stopped trading for more than half the day on the world’s best-known stock exchange already seems to be fading into memory. Unlike the aftermath of other market snafus, such as the Knight Capital algorithm disruption in 2012, the botched Facebook IPO that same year, and the 2010 ‘flash crash’, the three-and-a-half-hour NYSE outage of July 8 isn’t being rehashed continuously with recriminations flying across CNBC. Given the length of the outage and the iconic name of the venue on which it happened, it’s somewhat remarkable that the story doesn’t have legs. Industry analysts have assessed the nuts-and-bolts of the outage, and NYSE owner IntercontinentalExchange surely is reviewing sequence of events, but in a broad sense the ex post facto consensus — ironically — is that the system worked.

Would Reg SCI Have Prevented the NYSE Outage?, TabbForum, July 21, 2015.
The SEC’s new Reg SCI will offer insight for both the commission and affected market participants into the nature and cause of outages. But as currently constructed, Reg SCI is very reactive in nature and is not nearly as effective at preventing an outage as the economic disincentive that an outage causes – and that is what truly keeps outages from being more prevalent.

Would Reg SCI have prevented the NYSE outage this month?, FTSE Global Markets, July 20, 2015.
NYSE suffered an outage in early July, apparently caused by a botched system upgrade on a single Trading Unit. The outage caused NYSE to close for 3 hours and 33 minutes and resume trading at its back-up trading facility. The outage raises several questions: why was this outage not caught in testing? Is it considered industry best practice to release a new software patch onto one of several Trading Units in a live production environment? Were any tests run on the Production Trading Unit after installation of the new software patch? Jim Myers, senior manager of business consulting at Sapient Global Markets walks us through the answers.  

Sapient gets India push after Publicis buy, Deccan Herald, July 19, 2015.
Sapient Global Markets, a division of Sapient Corporation, which was recently acquired by advertising conglomerate Publicis Groupe for a $3.7-billion deal, is expanding its India focus. The company contributes 30 per cent of the revenues of the parent Sapient Corporation. In an interaction with Deccan Herald, Sapient Global Markets Vice President Jarlath Forde said the India centre does everything from technology development, to testing pieces, to relevant advisory for the client.

Speaking Dodd-Frank-ly, Asset Servicing Times, July 16, 2015.
Billed as the end to ‘too big to fail’, has Dodd-Frank actually bitten off more than it can chew and ended up too broad to succeed itself? Stephanie Palmer reports. When US President Barack Obama signed the US Dodd-Frank Act into law in 2010, for many it stood for the beginning of the end of the financial crisis. The legislation was designed to mean the end of institutions deemed ‘too big to fail’, making the whole financial services industry fairer and safer, in the US at least.

Digital: Are Firms Using It To Solve The Problems Of Today Or Build For Tomorrow?, CMO, July 15, 2015.
In the face of the increasingly rapid market change, are digital initiatives enough to create the agility and transparency needed to succeed? The latest paper from Sapient Global Markets makes the distinction between digital initiatives, designed to enhance a specific function or area, and digital transformation, which can enable greater agility, transparency and advocacy. It discusses how, through digital transformation, firms can seamlessly adapt to future market, business and technological change.

NYSE outage puts focus on effectiveness of SEC's Reg SCI, Thomson’s Reuters Compliance Complete, July 15, 2015.
Last week's outage at the New York Stock Exchange has put the spotlight on a rule meant to enhance the reliability of the technology infrastructure of the U.S. equity markets, and raised questions over whether the rule would do anything to prevent a recurrence. Reg SCI would require exchanges and private trading venues to establish policies and procedures that ensure their trading systems comply with the law. They must choose an individual or firm to participate in the testing of their business continuity plans, and coordinate their testing on an industry-wide basis. The U.S. Securities and Exchanges Commission adopted the rule last November after a series of technology breakdowns roiled the U.S. equity markets. The most prominent incident was the May 6, 2010 "flash crash," which saw futures and securities indices plummeting by more than 5 percent in minutes, before rapidly recovering.

Dodd-Frank Raises Bar on Trade Reporting, MarketsMedia, July 14, 2015.
Almost a half-decade since being signed into law, the Dodd-Frank Wall Street Reform and Consumer Protection Act has had a broad impact on various areas within capital markets, swaps trading prominent among them. The industry’s regulator-forced evolution remains a work in progress, but from a reporting standpoint, over the counter swaps trading has already advanced by leaps and bounds. “As recently as a few years ago, trades were confirmed on paper over fax. You had quite a lead time from putting the phone down and accepting it’s a done deal, to actually having all the details entered into the system and having the trade confirmed,” said Peter Meechan, director of business consulting at Sapient Global Markets. “Now, immediately as you put the phone down or answer the email or whichever execution method you use, that has to be put into a system and electronically reported.” 

Reporting Costs Set to Sore, IFR, July 14, 2015.
The majority of firms are still using in-house systems for reporting their derivatives trades and see costs rising substantially over the next two years as they navigate an increasingly complex reporting regime stemming from multiple regulatory initiatives.According to a survey of buy and sell-side firms conducted by business technology and consulting firm Sapient Global Markets, more than 72% of those surveyed at ISDA’s AGM in Montreal are using are using in-house systems. Almost two-thirds of those expect technology and associated costs to rise by more than 25% over the next two years. A sizeable proportion thought that costs would be significantly higher with a quarter expecting costs to rise by more than 50%. But despite those stark cost increases for firms that have already invested heavily in technology and infrastructure to meet Dodd-Frank and EMIR reporting requirements, other issues topped the list of concerns. 

Solutions Catch Fire, Inside Reference Data, July 13, 2015.
Data quality efforts emerge to address OTC derivatives data compliance requirements and corporate actions professionals are finding new ways to address discrepancies. Regulatory changes affecting over-the-counter (OTC) derivatives trading, after years of gestation following the 2008 financial crisis, are now being felt since starting to take effect in the second half of 2014. European Market Infrastructure Regulation (EMIR) and actions by the US Commodity Futures Trading Commission, based on the Dodd-Frank Act, will increase operating costs and require firms to re-think their handling of OTC derivatives data, as described in stories in the July issue of Inside Reference Data: "OTC Derivatives Trade Reporting Costs ‘Will Rise'" and the "Standard Derivation" feature. The survey covered in the front page story found that OTC derivatives reporting costs already rose a lot in recent years, says Paul Gibson of Sapient Global Markets, the consulting and services provider that conducted the inquiry.  

Mifid II adjustments fail to ease energy firms' worries, Risk, July 10, 2015.
Energy firms such as utilities are fighting hard to avoid being regulated under Mifid II and having to comply with onerous EU financial rules. But despite last-minute changes to regulators’ proposed technical standards, the chances of escape appear slim. To some commodity market participants, the Markets in Financial Instruments Directive (Mifid) might sound like an arcane piece of European Union legislation that has little effect on their business. Indeed, the 2004 Mifid directive contained generous exemptions for firms that trade commodities – including blanket exemptions for commodity dealers and firms trading on their own account – meaning many did not have to worry about the far-reaching implications of becoming licensed under the law.

Sweeping Changes for Managers in Dodd-Frank’s Fifth Year, FundFire, July 10, 2015.
Regulatory and reporting requirements, the threat of ’systemically important’ designations and a greater thirst for costly collateral are a handful of pressures the Dodd-Frank Act – five years old this month – has inflicted on asset managers, requiring them to alter how they operate. When President Obama signed the Dodd-Frank Act into law on July 21, 2010 he heralded it as a tool to bring transparency to the riskier parts of the financial sector. For asset managers, this has included a raft of changes in rules aimed at managers and counterparts like banks, but also broader shifts throughout the financial services industry since the crisis.

Trade reporting costs on the rise, Markets Media, July 10, 2015.
Investment banks have on average each spent almost $25m to comply with trade reporting requirements in US and Europe, and costs are expected to rise.Paul Gibson, a business consulting manager with Sapient Global Markets, told Markets Media that the $25m estimate may be too low. 

Derivatives market concerned by trade reporting costs, The Trade, July 9, 2015.
Market participants on both sides of the Atlantic are concerned about the increasing costs of staying compliant with OTC derivatives trade reporting requirements. A survey by Sapient Global Markets shows that 61% of the buy- and sell-side participants believe the costs associated with trade reporting will rise by a minimum of 25% over the next two years.

Survey: Trade Reporting Costs Expected to Continue Rising, Profit & Loss, July 9, 2015.
A new survey conducted by Sapient Global Markets shows that the costs for managing trade reporting is expected to rise significantly over the next two years. The survey notes that over the past five years market participants have incurred significant costs in order to remain compliant with new regulations, with banks alone having spent almost $25 million on average to achieve compliance for both Dodd-Frank and EMIR. 

OTC Derivatives Trade Reporting Costs will Rise, Inside Reference Data, July 8, 2015.
Most institutions are still using in-house systems for reporting data to trade repositories. The majority of market participants expect the cost of over-the-counter derivatives trade reporting to rise, a new survey has found. Sapient Global Markets this month released the findings, gathered by canvassing some 50 delegates to the 30th annual general meeting of the International Swaps and Derivatives Association (ISDA), held in Montreal in April. About 50% of respondents were sell-side participants and about 33% buy-side. The rest were broker-dealers. Paul Gibson, a consultant at Sapient in New York says that historically, the sell side has felt the most pain from OTC derivatives reform, with investment banks alone spending $25 million on reporting in Europe and the US.  

Energy trading technology moves gradually into the cloud, Energy Risk, Jully 7, 2015.
Energy trading and risk management (ETRM) software is gradually starting to make use of cloud computing – a move that could improve the efficiency and capabilities of ETRM systems while also reducing costs, say consultants and market participants. In today's rapidly changing energy market, the competitive pressure faced by traders can possibly only be matched by the strain placed on technologists. With market conditions and regulation combining to squeeze revenues across the industry, many energy trading firms have been forced to review their energy trading and risk management (ETRM) systems. But partly thanks to disappointing earnings, the IT budgets at many companies are also being squeezed. An Energy Risk survey published in March found that 63.4% of respondents' software budgets were set to stay constant or decrease in 2015 compared with 2014. 

Renewable Stocks Become Green Chips on Stock Exchanges, Financial Chronical, July 6, 2015.
There’s a lot of optimism in the energy sector, as expansion in industrial activity and a growing population are expected to boost energy demand, says Mukul Sharma, director, Sapient Global Markets, the Boston-headquartered global integrated advisory, programme management, analytics, technology company. In an interview with Ritwik Mukherjee, he says growing market penetration and per-capita usage will provide further push to the energy sector. 

Mind the Clearing Gap - What's Next for FCMs?, DerivSource, July 2, 2015.
The ongoing departure of FCMs has left an opening in the OTC clearing world but views differ as to who will fill these openings. Lynn Strongin Dodds looks at the different participants hoping to gain a foothold. Nomura’s recent retreat from OTC clearing was just one of the many high profile exits seen over the past two years. Jefferies, State Street, BNY Mellon and Royal Bank of Scotland have all already exited the client clearing space and more may follow. One of the big questions is who will fill the gap? While some believe non-bank futures commission merchants (FCMs) will step into the breach, others are worried that the larger players will only tighten their grip. 

June 2015

Weighing up the options: In-house build or outsourced service?, FTSE, June 24, 2015.
As with any business decision, financial analysis is a critical input to deciding whether to upgrade/build a trade reporting solution or outsource to a third-party provider. In building or upgrading a solution, firms typically incur costs involved in interpreting regulations and defining business requirements, design/engineering and project implementation, physical infrastructures, operations and support staff and trade repository fees. Finally, there is the consideration of opportunity costs—the consumption of resources that could support other business initiatives—should be factored into the total cost of ownership. The following two scenarios demonstrate the total cost of ownership of building an in-house reporting system versus using a managed solution. Costs and calculations reflect Sapient’s first-hand experience working with banks and buy-side firms worldwide.  

Can firms afford to comply with trade reporting requirements?, FTSE, June 24, 2015.
Now that most G20 member states have mandated trade reporting of derivatives, market participants have an opportunity to evaluate the agility and sustainability of their current approach. In this article, Randall Orbon, Arun Karur and Cian Ó Braonáin of Sapient Global Markets discuss the state of trade reporting and show how growing costs, complexity and regulatory scrutiny are fuelling a compelling business case for third-party managed solutions.  

Banks prepare to handle challenges of Fatca and its offspring, OpRisk, June 24, 2015.
The US Fatca tax-evasion law has triggered new tax compliance efforts around the world. Banks must now deal with new regulatory demands in almost every jurisdiction, while still keeping an eye on the uncertainties surrounding how Fatca reporting will work in practice.

The Data Deluge: Automated Trader, June 18, 2015.
A data deluge is hitting capital markets as new surveillance, trade reporting, regulation and market practices come to fruition. Neil Ainger asks if firms can handle the huge volumes of data, intra-day collateral, repository and other forms of data now required on global financial markets.

International regulators increase margin period of risk: What market participants need to know, Westlaw Journal Derivatives, June 18, 2015.
As the central counterparty market continues to expand, clearinghouses are offering an increasing number of clearable securities and netting efficiencies. There is now an increased focus on the fate of currently unclearable over-the-counter derivatives. OTC derivatives are privately negotiated transactions that do not occur on an exchange.

Information Industrialization: Digitizing business relationships for energy industry companies – Part 2, PennEnergy, June 12, 2015.
Business utilities for the energy industry can connect information among producers, traders and asset operators. The business utility platform depicted in Figure 1 connects shippers and operators to exchange data across the energy logistics value chain. In this example, a trading organization connects to the business utility to send trade confirmations (to be sent to counterparties), and once scheduling is done, it forwards all nominations for all modes of transport. 

Information Industrialization: Digitizing business relationships for energy industry companies – Part 1, PennEnergy, June 10, 2015.
Large-scale uncertainty, regulation and shifts in the competitive landscape are placing enormous pressure on energy firms’ existing operating models. In this article, Rashed Haq discusses an approach for “information industrialization” to help energy companies more effectively compete and thrive: harnessing modern information technology and adopting lean operating principles to create integrated, inter-company workflows across the energy value chain.

Information Industrialization: Digitlizing Business Relationships for Energy Companies,, June 8, 2015.
Large-scale uncertainty, regulation and shifts in the competitive landscape are placing enormous pressure on energy firms’ existing operating models. In this article, Rashed Haq of Sapient Global Markets, discusses an approach for “information industrialization” to help energy companies more effectively compete and thrive: harnessing modern information technology and adopting lean operating principles to create integrated, inter-company workflows across the energy value chain. 

IT vendors take the strain, FOW, June 5, 2015.
Pressed heavily by regulatory costs, sell-side firms are increasingly turning to off-the-shelf IT solutions. Barclays’ decision to outsource its post-trade derivatives trading technology to capital markets IT giant SunGard comes as a slew of sell-side firms have stepped back from the servicing clients’ trading and post-trade derivatives needs.

A Regulatory ‘Time Out’: Assessing the Impact of New Rules on the OTC Market, TabbForum, June 3, 2015.
The adverse impact of a jurisdictional implementation approach to regulating the OTC market is becoming ever more apparent. Requirements vary significantly by jurisdiction, which introduces contradictions that increase the operational costs to implement rules and prevents regulators from efficiently aggregating global data to assess risk. 

Maximizing Fleet Utilization Is Critical For Crude Shipping Market, Midstream Business, June 2, 2015.
In 2014, oil production across North America hit all-time highs. With limited pipeline capacity, additional production from the oil sands and the Bakken Shale and the delays of new and expanding pipeline projects, companies were forced to look for alternative ways to move their product to market. Shipping crude by rail became a viable option and necessity for many companies. Capital investments were made into loading and unloading facilities, which allow crude oil producers to utilize the existing rail network to reach desired markets. 

May 2015

Crude Export Ban in Congress’ Crosshairs, Rigzone, May 2015.
Eager to stanch the bleeding from low oil prices, oil producers will probably get behind legislation to lift the ban on U.S. crude oil exports to generate more cash flow. But it won’t be that easy. Rashed Haq, vice president for business consulting at Sapient Global Markets in Houston, told Rigzone that you have to look at the crude export ban from two perspectives: the economic and the political. Without perspective, the reality of either can send big plans plummeting. 

Growth view, higher demand light up power companies’ prospects, Financial Chronicle, May 31, 2015.
The country’s energy market is evolving and adapting to the new challenges. Certain segments of the industry are developing methods to improve revenue generation from their existing asset base and increase profitability. The scenario over the past one-to-three months has not been inspiring either. Comparatively, renewable energy companies like Suzlon have given a return of 24 per cent over the last one year. “The index is down by over 14 per cent in the last one year and down by 20 per cent from its peak, primarily attributed to the fall in the energy prices impacting companies’ revenues and profitability. Based on the annual results declared so far, oil and gas sales are down around 40 per cent and in the power sector these are down by 5 per cent. Profitability (PAT) for the energy and power sector is down by 16 per cent and 59 per cent, respectively. The mixed results from the PSU energy majors did mark a change in the ongoing sentiments in the sector,” said Mukul Sharma, director, Sapient Global Markets. 

Welcome to the bobsguide Trading Systems Guide 2015, Bobsguide, May 29, 2015.
Trading system upgrade or replacement projects are vast undertakings. Success lies in a combination of factors including the relationship with the vendor, involvement of stakeholders and understanding of technology and business requirements. Heather McKenzie reports.Nearly a decade on from the introduction of the Markets in Financial Instruments Directive (MiFID) in Europe and RegNMS in the US, the trading platforms financial firms implemented in response to the regulations are showing their age. Technology and financial regulators’ requirements have moved on and many firms are looking to upgrade or replace existing systems. 

Exploring Strategic Reserves, Power Today Magazine, May 18, 2015.
The reserves on which the government is presently working are not typically meant for hedging against price risk, but against supply chain disruptions. The Government of India (GoI) had in 2004 decided to set up 5 million metric tons of strategic crude oil storages at Visakhapatnam, Mangalore and Padur, in order to ensure energy security, which in addition to the existing storages of crude oil and petroleum products with oil companies, serve as a cushion in response to external supply disruptions.  

Battery Wars: Is Tesla Setting Up A House Of Cards?, Forbes, May 14, 2015.
Is Tesla’s new battery storage product the ‘holy grail’ needed to integrate renewableenergy and improve the reliability and cost-effectiveness of the electricity grid? It doesn’t look that way. In fact, it may be a second product line for a money-losing company that has serious issues with sustainable competitive advantage. 

The next phase of outsourcing: change the bank with digital transformation, Banking Technology, May 13, 2015.
Financial services firms have always faced market volatility, but new challenges are forcing most to rethink their traditional operating models in favor of outsourcing. The expanded use of outsourcing models will help improve revenue and create new business opportunities, writes Sean O’ Donnell.

Cross-border issues continue to plague derivatives market, FierceFinanceIT, May 12, 2015.
Last Thursday, EU and U.S. regulators met to try to harmonize rules regarding central clearing in the derivatives market. Despite the optimistic nature of the joint statement regulators released after that meeting pledging to work toward a summer full of resolutions on issues, most reactions seemed less upbeat. "It's like circling in in a holding pattern on a flight for the clearing guys, because eventually they are going to run out of fuel," says Jim Bennett, Sapient Global Markets managing director. Bennett sees the market moving toward utility models for services such as trade reporting and back office processing of OTC derivatives to alleviate the costsri of complying with existing regulations and others still emerging.  

Collateral Management: When Does It Make Sense to Outsource?, TabbFORUM, May 12, 2015.
Once collateral is treated as a new asset class, firms will be challenged not only to satisfy counterparty needs and regulatory requirements, but also to generate additional revenues through collateral trading. And they will need to evaluate all of the benefits and costs of an in-house versus outsourced solution. In Collateral Management: When Does It Make Sense to Outsource?—a new white paper from Sapient Global Markets.

Collateral optimisation key to outsourcing decisions, Securities Lending Times, May 11, 2015.
As various regulations start to take effect, buy-side firms are increasingly evaluating the benefits and costs of in-house solutions, compared to outsourcing. The report [by Sapient Global Markets on Collateral Management] suggested that collateral will soon be treated as a new asset class, and so, in addition to satisfying counterparty needs and regulatory requirements, firms will also have to generate revenue through collateral trading, optimisation of assets and re-use of collateral.

Sapient Global Markets releases report on collateral management, Automated Trader, May 8, 2015.
Sapient Global Markets' new report examines the outsourcing of the collateral management function. In this paper, "Collateral Management: When does it make sense to outsource?" Sapient Global Markets discuss the evolution of collateral management, outlining the key drivers involved in making the in-house vs. outsource decision and to provide an approach to quantify it, based on real-world scenarios and discussions with clients, but using a fictitious Asset Manager as the example. 

Digital Transformation: A Look Ahead, Markets Media, May 7, 2015.
For a perspective on the future of the digital transformation of capital markets, rewind to a seminal work of scientific literature published 156 years ago. “There’s a great line from The Origin of Species, where Darwin says it’s not the strongest that survive or the most intelligent, but the one that’s most adaptable to change,” said Matthew Hopgood, London-based vice president at Sapient Global Markets and co-head of the firm’s visualization practice. “That’s at the heart of the digital-transformation conversation.” 

Collateral moves to front office as buyside mulls outsourcing, GlobalCapital Derivatives, May 7, 2015.
The need for buyside firms to address immediate cost concerns as well as the ability to address future uncertainties has posed challenges as firms contemplate outsourcing their collateral management requirements to third party vendors or custodians. “In the past, to have a spreadsheet based solution worked well for a lot of buyside firms, given what they were having to deal with,” Neil Wright, industry adviser to Sapient Global Markets, told GlobalCapital. “However, the whole arena is now so much more complex with more and more asset types being subject to collateral, the opportunities for netting are obviously very important and firms want to avail themselves of those wherever possible. 

Bitcoin Comes of Age as New Technology Questions Follow, Waters Technology, May 6, 2015.
New products, trading venues and technology providers indicate that 2015 will be remembered as the year crypto-currencies and their underlying technology finally entered the capital markets. How they will get there is still hotly debated with multiple hurdles still to clear and the smart money heading in many directions. But interestingly, and sensibly, several of the platforms (and personas) have a shared heritage—from swaps. Tim Bourgaize Murray explains. 

Taking Steps For Cross-Border Data Harmonization, Inside Reference Data, May 6, 2015.
Canadian regulators’ implementation of new trade reporting rules aims to integrate their markets with global guidelines. Joanna Wright reports.

Portfolio Reconciliation: Why An Industry Utility Makes Sense, DerivSource, May 5, 2015.
As over-the-counter (OTC) trade reporting is being implemented around the globe, concerns about the accuracy of the data being reported are growing among market participants and regulators alike. In fact, both the US Commodity Futures Trading Commission (CFTC) and European Securities and Markets Authority (ESMA) stipulated that institutions must establish processes to identify and monitor disputes for bilateral trades, creating an urgent need for firms to be able to identify and resolve any data discrepancies. In addition, trade repositories (TRs) are expected to perform inter-TR and intra-TR reconciliation and potentially extend this service to participants. In this article, Dheeraj Joshi and Ravi Jain of Sapient Global Markets address the need for reconciliation as an industry utility and the advantages for trade repositories and financial institutions. 

ESMA adds second-level reporting validation, IFR, May 2, 2015.
The European Securities & Markets Authority has introduced an additional layer of validation for registered trade repositories to ensure the completeness of data submitted on swap transactions under the European Markets Infrastructure Regulation. As part of a newly published question and answer paper relating to the implementation of EMIR, Europe’s key swaps market regulator unveiled a new two-step process that will be effective from October to ensure reporting is performed according to the new regime and in line with rules set out in the technical standards. 

ESMA's High Hopes for Centralized Reporting, Inside Reference Data, May 1, 2015.
The European regulator tells Joanna Wright how it hopes two projects in the works will bring efficiency and harmonization to EU regulatory reporting. Cian O'Braonain, regulatory reporting practice lead at Sapient Global Markets, says that without the larger NCAs, such as Germany's BaFIN or the British Financial Conduct Authority (FCA) on board, ESMA may have "a bumpy road" ahead 

April 2015

Are OTC derivative rules a blessing or a curse?, The Trade, April 30, 2015.
Asia’s OTC derivatives markets have been both blessed and cursed by the fact they have implemented the structural reforms demanded by the Group of 20 in the wake of the larger European and US markets. Blessed, in the sense that they can learn from the mistakes and experience of those countries that went before. Cursed, because the rules already laid down in the west are having a profound and not wholly positive impact in the east. “Some banks saw a marked uptick in business from offering delegated reporting services in Europe. And although volumes might be lower in Asia, I’d expect them to cater for clients’ reporting requirements in that region too, subject to local rules on agency reporting,” says Cian O’Braonain, director of regulatory reporting practice at Sapient Global Markets. 

ESMA adds second-level reporting validation, IFR, April 28, 2015.
The European Securities & Markets Authority has introduced an additional layer of validation requirements for registered trade repositories to ensure the completeness of data submitted on swap transactions under the European Markets Infrastructure Regulation. As part of a newly published question and answer paper relating to implementation of EMIR, Europe’s key swaps market regulator confirmed a new two-step validation process to ensure reporting is performed according to the new regime and in line with rules set out in the technical standards. 

Oil Prices Won't Recover Without Significant Increase In Demand, Forbes, April 23, 2015.
In the past, such an increase would have been seen as inevitable in the wake of cheap prices and falling supply, but that may no longer be the case. The demand destruction caused by years of high prices will be far harder to reverse than in the past thanks to a mix of technological advancements and government mandates limiting oil consumption. And, even if consumers wanted to use more oil, they may not be able to do so. 

Digital Transformation: Agility Needed, Markets Media, April 22, 2015.
For a capital-markets firm to digitally transform itself, agility is needed. Lumbering, bureaucratic organizations will be left behind. 

Innovative Optimization Techniques Turn Collateral Management into Profit Centers, TabbFORUM, April 22, 2015.
Minimizing the cost of the collateral required to support a given volume of business is crucial to the profitability of today’s financial institutions. As a result, collateral management is evolving from an operational cost center to a front-office profit center, essentially becoming a dedicated business line. 

Capital Markets Feel Digital Transformation, Markets Media, April 16, 2015.
Companies like Uber, Airbnb and Spotify have disrupted the businesses of transportation, hospitality and music. Agents of change are now eyeing capital markets as the next frontier for a similar digital transformation. The financial sector historically hasn’t been the most fertile ground for disruptors and innovators, but that has changed in the past few years as new regulations in North America and Europe have encouraged competition in areas such as corporate, investment and retail banking. “On top of that, and this is particularly true of the capital markets sector, new regulations are changing the whole operating and capital cost model,” said Matthew Hopgood, London-based vice president at Sapient Global Markets and co-head of the firm’s visualization practice. 

Everything you need to know about swap futures, The Trade Derivatives, April 15, 2015.
Infographics on swap futures featuring data from Ben Larah, Senior Manager at Sapient Global Markets. 

Why are oil prices fluctuating?, Business Standard, April 14, 2015.
From February to mid-March, oil prices receded rapidly. WTI dropped by 22 per cent in six weeks. Brent crude was down about 15 per cent. Then, in the past four weeks, the oil inched back up to the price levels at the start of February. Crude may see modest gains in price through end of this year, however, it will take a while before oil scales $100 again. 

Are OTC derivative rules a blessing or a curse?, The Trade Asia, Q1 2015.
Central reporting and clearing of OTC derivatives is getting under way, but Asia’s major hubs find western precedents a two-edged sword. “Some banks saw a marked uptick in business from offering delegated reporting services in Europe. And although volumes might be lower in Asia, I’d expect them to cater for clients’ reporting requirements in that region too, subject to local rules on agency reporting,” says Cian O’Braonain, director of regulatory reporting practice at Sapient Global Markets.” 

Watchdogs set to attack as trade reporting deadline looms, The Trade, April 13, 2015.
Firms are scrambling to improve the accuracy and cost efficiency of trade reporting for buy-side firms by offering up new solutions. The reporting of derivatives trades has become a mandatory requirement across Europe under the European Market Infrastructure Regulation (EMIR), and the first year of the new rules has been wrought with challenges. Cian Ó Braonáin, the lead of Sapient Global Markets' regulatory reporting practice, says that firms are now looking for ways to lower their total cost of ownership without compromising reporting quality or compliance. 

TCO of Trade Reporting– Time For a Re-Think?, Global Custodian, April 9, 2015.
With many of the initiatives now in place to improve market transparency through trade reporting of OTC derivatives, market participants are taking stock, assessing the quality of their solutions and trying to understand what the annual running costs will be. The first step in the process is estimating the costs incurred by trade reporting; no easy task due to the variety of approaches taken to get compliant. Despite sizable initial investments, many institutions are still grappling with data management challenges and inefficient trade reporting processes and governance

Fund Managers: Fixing EMIR Reporting Glitches, FinOps Report, April 8, 2015.
Now that more than a year has passed since they’ve had to deal with new reporting requirements under the European Market Infrastructure Regulation (EMIR), fund managers are belatedly waking up to the fact they could soon face whopping regulatory fines for not submitting correct data on their derivative transactions to accredited trade repositories. “Different systems could easily have divergent data,” explains Cian O’Braonain, director of the regulatory practice for Sapient Global Markets in London. “It’s the common problem of data silos which then requires data to be reconciled internally.” Of course, one can only hope that a fund manager’s trading system correctly captures any changes to the trade over the course of the transaction’s lifecycle, as well as information on collateral matches reported by its counterparty. Then comes the interpretative clincher: fund managers might have a different opinion than the regulators or even their counterparties about identifying the asset class of the trade and, in the case of a complex structure, whether to report separately on each leg instead of the transaction as whole, says O’Braonain. 

3 Key Trends to Shape the Energy Markets Beyond 2015, Oil & Gas Monitor, April 8, 2015.
In the current environment, change is the only certainty. While the industry continues to deal with the impact of falling oil prices, a number of important trends will develop and evolve. These will challenge market participants in different ways; however they share some commonalities in that they all encompass the need to utilise increasing amounts of data to empower more strategic thinking, deliver greater operational efficiencies and support more effective resource usage. While these are aspirational targets, the change is already occurring – witness Google purchasing Nest Labs for $3.2bn – and we will be hearing much more about the power and potential of the IoT throughout 2015 and beyond.

Oil Traders Increasingly Struggle To Bet On Higher Prices, Forbes, April 8, 2015.
If you ask oil traders what they are most concerned about, you’ll hear a variety of answers, ranging from the current large supply overhang in crude to the value of the U.S. dollar. But what you won’t hear is any talk about what’s going on in Yemen’s civil war, ISIS in Iraq, or Putin’s next gambit. As Shakespeare said, a tale “full of sound and fury, Signifying nothing”. Lower prices are going to be with us for years. 

Data's darkest before the dawn, Asset Servicing Times, April 8, 2015.
As the data revolution gets underway, asset managers need to be armed to analyse, or risk missing the battle all together. In an age of increased reporting regulations and ever-changing financial technology, data and analytics are being shuffled to the top of the priority pile. As more and more data is created, compiled and filed away, firms are beginning to consider how they can build a better picture of their investors, assessing their needs and wants. According to Chris Collins, global director of regulatory response at Sapient Global Markets, having large volumes of data is not the new development. He says: “Data is a hidden asset. Firms have had it for years, but haven’t been making use of it.” 

Trade Reporting: A Costly Exercise, Markets Media, April 8, 2015.
Faced with a wave of trade reporting regulations, capital markets firms are questioning whether it’s worth it to continue to adjust internal infrastructures — particularly with the availability of new alternatives, such as outsourced trade reporting services. A large bank that makes 500,000 trades per month can expect to spend about $30 million to build an initial reporting system, plus $18 million per year to maintain it (including operations, testing, technical, remediation and business analysis resource costs), according to a report by Sapient Global Markets. Additional system build-out costs for Tier 2 banks to address Emir and other G20 rulesets are estimated at $45 million. 

Advisers set to be the biggest losers in digital revolution, International Adviser, April 7, 2015.
Independent financial advisers in the UK and wealth managers on the continent are likely to be the biggest losers in the current “digital revolution”, according to new research. However, experts have said the rise of digitalization should bolster the advisory business rather than threaten it. Vice-president at Sapient Global Markets, Jarlath Forde, said technology could be used to automate repetitive tasks, which would mean IFAs could take on more clients. “Financial advice is still a business based on people,” he said. “Digital platforms are about empowering people, not about offloading services onto the client. 

Social Media in the Institutional Realm: Cultivating Use, Aite Group, April 2, 2015.
In 2010, Aite Group looked at the institutional market’s use of social media. It was deemed a corporate communications and marketing initiative at the time, but a lot has changed. Asset managers are gradually accepting this media, and the institutional side overall is identifying its own use cases more often. Firms that are ready to do more than listen in, however, will require technology and tools to support their social media strategies. Independent management consultant firms such as Sapient Global Markets, among others offer this support. For example, Sapient has helped investment managers with the design and delivery of systems using technology to identify and connect information across internal and external research. Sapient’s technology includes the ability to alert investment professionals based on events identified using typical news feeds, online sources and changes in social media data. 

Single Dealer Platforms: are their days numbered?, FTSE Global Markets, April 1, 2015.
While single dealer platforms (SDPs) have improved the experience presented to an institution’s trading clients, they are not entirely fulfilling the core requirements in terms of openness or degrees of specialty. The needs of the institution and its clients are still too much at odds and this discord will drive the next revolution in client trading and information services. Sean O’Donnell, director of technology and Matt Hopgood, vice president and co-leader of Sapient’s Visualization practice discuss the next generation of these platforms and the implications to business and technology strategies. 

March 2015

Outsourcing trade reporting offers more adaptability, GlobalCapital, March 27, 2015.
Firms with trade reporting obligations can save resources allocated to complying with reporting requirements by outsourcing their requirements to a third party provider. This can reduce initial system building costs, as well as provide better adaptive abilities in the future, according to Sapient Global Markets. “With many challenges surrounding trade reporting, the question we often hear is whether participants can afford to continue with their current approach,” said Randall Orbon, senior vice president at Sapient Global Markets, in a statement. “It is apparent, given the amounts already invested, that building, rebuilding and re-engineering current systems is not a viable option for what is a highly commoditized function. 

CFTC clamps down on "untenable" reporting rules, Reuters IFR, March 26, 2015.
The Dodd-Frank goal of a complete picture of swaps activity appears to be light years away. Chief regulator, the CFTC, is clamping down on industry compliance with newly established swaps reporting rules, just as market participants publicly complain to Congressional authorities that rules are too harsh. Aside from the agency’s frustration, a report from industry consultancy Sapient Global Markets indicates the banking industry is nowhere near full compliance even after an average dealer spend of almost US$25m each to meet those obligations. “Despite sizable investments, many banks are still grappling with data management challenges and inefficient trade reporting processes and governance…Tight timelines have resulted in many shortcuts and reduced features, particularly related to data mapping, data ingestion and operational management information reports,” wrote Randall Orbon, senior vice president at Sapient, in a white paper released today.

Director: Asset Optimization Gives Needed Boost During Tough Times, Midstream Business, March 25, 2015.
With low oil and gas prices squeezing profits, companies are searching for smart savings opportunities. Dale St. Denis, director for midstream of Sapient Global Markets, told Hart Energy that when times are tight, turning to a consultant who can look objectively at your business and advise you how to best utilize your assets can be a worthwhile investment for midstream providers. When evaluating a company’s options, Sapient focuses on strategy—how the company plans to expand or leverage its service offerings. “We help them with their consolidation of assets, how they ought to reposition those assets … to better serve their shippers,” he said. “We also provide technology evaluation services to help them understand what their options are for expanding their IT, or information technology, infrastructure to support their shippers with the management of these hydrocarbons through their assets.” 

The 20 Million Barrels of Pure Profit Sitting in U.S. Oil Tanks, Bloomberg, March 24, 2015.
Just as Wall Street says the U.S. is running out of room to store oil, it turns out there’s another 20 million barrels of empty space. “Their sole orientation is capturing the contango, and they’re pushing it as much as possible,” Rashed Haq, vice president at consultant Sapient Global Markets, who worked with a trader in November to model the use of his contingency space, said by phone March 17. “The difference between the working capacity and the tank top could be 1 percent, but that’s 1 percent of margin. That’s pure profit. That’s in the millions.” The trader whom Sapient’s Haq was helping to model storage capacity would have to send people up to physically check on the tanks every four hours if he filled the contingency space, Haq said. When they last spoke, Haq said, the client was still deciding whether it was worth the manual checks. 

Two sides of the Sebi-FMC merger, Business Standard, March 24, 2015
The half page story titled “Two sides of the Sebi-FMC merger” discusses both, the opportunities present for the exchanges as well as challenges posed for SEBI arising from the proposed merger. Aditya Gandhi, Director at Sapient Global Markets, talks about how this development will bring more liquidity to the market by allowing different institutions like banks and mutual funds to participate in both, equity as well as commodity derivative space. Aditya also emphasizes the fact that the new entity will have the opportunity to serve the expectations of the investors in a better way by standardizing the warehousing, clearing, and contract settlement process. 

Changing Paradigms in Commodity Markets: PRAs, Commodities Now, March 23, 2015.
Jeffrey Wang and Leor Jivotovsky examine how price reporting agencies are faring in light of recent regulation, and how they’re adapting their products and services. The article surmises that price reporting agencies are integral to the commodity markets. Their goal is to drive smart decisions by providing up-to-date market information.  

Will Oil Markets (And Shale Producers) Capitulate Before Demand Recovers?, Commodities Now, March 19, 2015.
Chip Register provides an overview of the current shale oil market. There has been increase in shale oil production thanks largely to credit access and advances in drilling technology and engineering. Shale producers have cut costs by 20-30% by reducing capital expenditures, negotiating cheaper contracts and cutting staff. He concludes that the oil price has always been and will continue to be a tricky prediction.  

The DNA Of A Marketing Game Changer, CMO, March 18, 2015.
Times are changing for marketers. As customers are becoming increasingly informed and new technologies are emerging at breakneck speed, marketers need to remain innovative in order to succeed.

Will The Oil Markets (And Shale Producers) Capitulate Before Demand Recovers?, Forbes, March 18, 2015.
Is the U.S. shale industry at a tipping point? Oil prices fell to a six-week low on Friday after the International Energy Agency warned that the U.S. may soon run out of room to store all the oil being pumped out of shale plays across the country. As oil starts to back up, the worry is that prices could fall like a rock. But despite this grave warning, bullish oil traders are keeping their cool. They believe that the low prices will ultimately decimate the U.S. shale industry, removing a large chunk of supply from the market indefinitely, similar to what happened during the last major oil price crash 30 years ago. 

Geek power: market regulators make creative use of technology, Operational Risk & Regulation, March 9, 2015.
Financial firms have long been avid users of sophisticated software, which is exemplified by the fact that computer algorithms rather than human traders conduct most trades on the world's equity markets. Those tasked with overseeing markets have often lacked the equivalent resources – but rapid advances in ‘big data' and declining costs of software mean that supervisors are starting to catch up. 

SC Congress: Can we trust cloud security?, SC Magazine, March 3, 2015.
High-level speakers at Tuesday's SC Congress took a highly pragmatic view of the mass user migration to cloud services – suggesting that reluctant security teams should embrace the cloud, so they at least know where their data is held, rather than have dozens of unsanctioned cloud repositories. 

February 2015

The Client Clearing Offering: Balancing Cost, Risk, and Client Service, CIO Review, February 2015.
Financial institutions are facing pressure to offer clearing services to their clients. This is a costly endeavor that offers little financial upside for firms: It is a low-margin service that requires a large capital commitment to clearing houses as well as a heavy investment in technology. Phil Matricardi and Adam Kott discuss the costs and risks of offering client clearing as well as how firms may begin collaborating in the future to meet their clients’ needs. 

Risky Business, Markets Media, February 24, 2015.
Regulatory risk is a major issue for trading and investing firms, for example with the European Union’s Markets in Financial Instruments Directive. The MiFID II regulatory regime is progressing toward its 2017 implementation date, with implications for U.S. companies that do business in Europe. In an increasingly global marketplace, this group includes essentially all large U.S.-based trading and investing firms. Central clearing mandates are overwhelming firms’ ability to generate the required reporting due to sheer volume and complexity. “Regulation is placing tremendous pressure on the clearing community, with conversations inevitably focused on the costs involved and how to potentially alleviate them,” said Jim Bennett, managing director at Sapient. “As a result, the industry is on the brink of transformation, as firms search for new ways to differentiate their clearing offerings while commoditizing the processes that either fail to offer competitive advantage or require decoupling due to regulatory requirements.” 

Remit delegated reporting leaves unanswered questions, Energy Risk, February 24, 2015.
EU energy traders have until October to begin reporting the details of standard power and natural gas trades to regulators under Remit. But the exact process by which many of these initial contracts will be reported remains blurry. 

Sapient Global Markets’ CMRS wins ‘Best Risk Management Solution – Innovation’ at 2015 Wall St Letter Awards, Bobsguide, February 23, 2015.
This is a general piece of pickup from the press release. 

Grid Security is Tenuous, More Microgrids and DG Needed, says Former FERC Chairman, Microgrid Knowledge, February 23, 2015.
Jon Wellinghoff, former FERC chairman, explains his concerns about grid security and vulnerability to attack, in an interview with Chip Register of Sapient Global Markets. 

Call for user-owned utilities to lower central clearing cost, Hedge Funds Review, February 23, 2015.
Survey shows buy-side thirst for clearing utilities, but it is argued a large utility might not provide the right incentives to build an efficient CCP model 

Oil Prices Hit The Snooze Button, Commodities Now, February 20, 2015.
Oil bulls and bears need to stop talking their books and get real. Crude isn’t going back above $100 a barrel – at least not anytime soon. Nor is it falling to $20. How can I be so sure? A confluence of political, economic, and, most importantly, technological changes are having a major impact on the way we produce and consume oil, making it both cheaper and more abundant. Barring some major international conflict, oil prices will most likely be range bound for quite a while, with a floor of somewhere around $40 a barrel (where we have seen massive rig count and CAPEX reductions) and a top around $80 a barrel, above which production really ramps up.

Oil Prices Hit The Snooze Button For The Next Year Or Two, Forbes, February 19, 2015.
Oil bulls and bears need to stop talking their books and get real. Crude isn’t going back above $100 a barrel – at least not anytime soon. Nor is it falling to $20. How can I be so sure? A confluence of political, economic, and, most importantly, technological changes are having a major impact on the way we produce and consume oil, making it both cheaper and more abundant. Barring some major international conflict, oil prices will most likely be range bound for quite a while, with a floor of somewhere around $40 a barrel (where we have seen massive rig count and CAPEX reductions) and a top around $80 a barrel, above which production really ramps up. 

If OTC Derivative Clearing Dispute Resolves, Could Volume & Liquidity Greatly Increase?, Traders Magazine, February 19, 2015.
Sapient's Phil Matricardi discusses the current volume dip and what to expect in the market if a regulatory agreement on OTC derivatives is reached soon. 

MiFID II: Harmonization Mandates New Business Models in OTC Space, The OTC Space, February 18, 2015.
In our article in CROSSINGS: The Sapient Journal of Trading and Risk Management, we take a deeper dive into the potential impacts of MiFID II—including the blurring lines between exchange-traded and OTC derivatives. We also explore the convergence of OTC and ETD market infrastructures, as well as derivatives dealers’ opportunity to reduce costs by developing partnerships with market infrastructure providers in order to meet common industry challenges and ensure common standards. 

Multiple Prime Utility: Transforming the Fund Manager/Prime Broker Relationship, Global Custodian, February 13, 2015.
In a previous article we discussed the evolution from a single-prime to multi-prime model and its impact on operating models. So how can Prime Brokers and Fund managers create an environment in which they can regain focus on their core competencies? For Fund Managers this means concentrating on generating alpha for their clients, without being burdened by aggregating positions and performing other middle- and back-office functions. PBs on the other hand will be able to focus on providing value-add services, such as Securities Lending, Margin Financing, Synthetic Lending, Repo Financing, Swaps, etc. 

Buyside Forced to Avoid Central Counterparty Regulatory Gridlock, Traders Magazine, February 12, 2015.
As the regulatory turf war drags on, buyside firms and CCPs are losing patience with the OTC derivative market's 18-month disagreement between U.S. and European regulators. They say it has hurt volume, and made markets riskier and more expensive.

Basel III: Getting Down to Details, Markets Media, February 10, 2015.
The ongoing phase-in of Basel III for U.S. banks will impact the structure of global financial markets in 2015 and beyond. In September 2014, U.S. prudential regulators issued a final rule that implements a quantitative liquidity requirement consistent with the liquidity coverage ratio (LCR) established by the Basel Committee on Banking Supervision. The final rule creates a quantitative liquidity requirement, the LCR, for covered companies. The LCR is the ratio of a company’s high-quality liquid asset (HQLA) amount to its projected net cash outflows over a 30-day period. When fully implemented, the final rule requires a covered company to maintain an LCR of at least 100%.

LCH 'disappointed' by Esma’s FX clearing decision, Financial News, February 10, 2015.
The chief executive of LCH.Clearnet’s specialist foreign exchange clearing house has criticised the decision by European regulators to abandon clearing for certain types of FX trades. The European Securities and Markets Authority decision last week not to introduce a clearing mandate for non-deliverable FX forwards – a type of contract where counterparties settle an FX transaction at an agreed time for a fixed rate – came after it received negative feedback from a consultation released in October 2014, which was initially triggered by LCH.Clearnet’s authorisation under Emir to clear NDFs. The firm is currently the only central counterparty in Europe authorised to clear the contracts.

What Do You Know and When Do You Know It?, Inside Reference Data, February 9, 2015.
Mastery of identifier and customer data, along with a better grasp of previously inaccessible data, is becoming key to gaining predictive value from reference data resources. The common element in several stories in this month's issue of Inside Reference Data is making efforts to find previously inaccessible data, collect new data or reconcile gaps between different sources of data. 

When will crude prices start increasing?, The Economic Times, February 3, 2015.
The market is debating who will blink first – Organization of the Petroleum Exporting Countries (OPEC) or the shale producers or will increased demand lead to increase in prices. And if prices rise how quickly will they go up. While no one can really predict what will happen but here is a look at some of the factors that will influence the crude prices. 

Benefits of Managing Your Reporting, Inside Reference Data, February 3, 2015.
The advent of new data fields creates complications for trade reporting, and intensifies gaps between multiple internal system implementations. Sapient’s Randall Orbon advocates managed services as the best means to address the issues.

Firms Uncertain About Derivatives Clearing: Sapient Report, FTF News, February 3, 2015.
Derivatives markets participants face a great deal of uncertainty over post-crisis clearing mandates, and are interested in the establishment of a purpose-built market utility to address buy-side clearing requirements, according to a survey released by Sapient Global Markets. The survey features the responses of 153 market participants and was conducted at the 2014 Futures Industry Association (FIA) Expo in Chicago. Three significant themes emerged, Sapient says in a statement.

January 2015

Commodity Trading Risk Management Systems 2015, Chartis Research, January 2015.
The commodities markets are at an important crossroads in their evolution. The process of trading, procuring and selling commodities has always been risky and intricate, and it is only becoming more complex over time. The commodities markets are increasingly dominated by large integrated trading houses; the importance of the supply chain and logistics elements have increased significantly. Market structures have shifted, and so risk management solutions must change in response. Therefore, to address the needs of this emerging marketplace, Chartis has produced its first report on Commodity Trading Risk Management (CTRM). 

Performance book of record or PBOR for short, Finops Report, January 30, 2015.
A white paper just released by Eagle Investment Systems has fueled talk among investment operations professionals on just what PBOR is and how seriously the concept should be taken. The two critical questions which top the discussion list: just how substantially it differs from the investment book of record (IBOR) and how it can be accomplished.

Falling Oil Prices Spur Energy Dealmaking, Institutional Investor, January 29, 2015.
Energy companies have invested billions of dollars in exploration and production projects over the past few years on the assumption that oil would remain close to $100 per barrel. Oil and natural gas companies — particularly those taking part in the U.S. shale boom — borrowed heavily on that assumption, and bond buyers have snapped up more than $50 billion worth of junk bond offerings from them. Almost no one predicted that oil prices would then dive, however, and that this debt, and many of the companies themselves, would lose billions of dollars in value in a matter of months. 

Crude oil prices might pick up in a year, Business Standard, January 29, 2015.
Given that signs of a recovery in crude oil demand are still elusive and a cut in supply is still not visible, when the slide in prices might halt remains an unanswered question for analysts. The thought of these coming further down is a cause for concern — for oil-producing countries, as well as India’s upstream oil companies. 

MiFID II Urgency Grows, Markets Media, January 26, 2015.
The MiFID II regulatory regime is progressing toward its 2017 implementation date, with implications for U.S. companies that do business in Europe. Firms will need to invest in building data analytics and operational efficiencies through automation, system consolidation and industrialization, as well as develop robust technology infrastructures and risk frameworks.

New SEC Swap Reporting Rules: An Easy Start, Bigger Impact Still to Come, Waters Technology, January 26, 2015.
The impact of the SEC's Regulation SBSR will depend on how soon a switch is made to real-time reporting. Dan DeFrancesco explains the four-year development of new rules designed to parallel those already in place for other asset classes. 

Defining A Target Operating Model In A Multi-Prime Brokerage World, Global Custodian, January 23, 2015.
As Fund Managers demand more transparency from their Prime Brokers (PBs) and adjust their business models to diversify counterparty risk, PBs also face new operational challenges around middle/back-office functions as they try to accommodate clients’ needs and remain competitive. This has inevitably led to a reorganization of the business model and competitive landscape of the Prime Brokerage industry. 

The Novation Challenge: how to ensure a successful outcome, DerivSource, January 19, 2015.
Nick Fry and Mark Thompson of Sapient Global Markets explore the main drivers behind the wave of novations, the key challenges firms have when faced with conducting this exercise and the guiding principles for a successful outcoming.

Derivs reporting to converge under multiple EU regimes, GlobalCapital, January 15, 2015.
This article outlines the convergence of transaction reporting and trade reporting under MiFID II.  

Swap futures battle to hinge on capital efficiencies, The Trade, January 15, 2015.
The success of new swap futures products could be decided by their ability to provide capital efficiencies, according to industry experts, after a recent spate of growth in the market’s offerings. A flurry of the new hybrid contracts has hit the market over the past three years though the market has yet to fully ignite as participants continue to weigh up their use against cleared swaps. For those trading and clearing both products through the same central counterparty the opportunity may arise for lucrative and cost-saving cross-margining prospects. 

MiFID II spurs new business models in the OTC space, FOW, January 14, 2015.
Viewing regulatory initiatives in isolation is no longer an option, as it poses the risk of missing key inter-relationships and greater regulator cooperation, as well as potentially increasing the cost of compliance and failing to identify profitable business opportunities. Paul Gibson, Kimon Mikroulis and Cian Ó Braonáin of Sapient Global Markets discuss how firms can start thinking about their business models to exploit the synergies arising from the significant overlap across regulatory regimes. 

The Battery Revolution: A Technology Disruption, Economics and Grid Level Application Discussion with Eos Energy Storage, Forbes, January 13, 2015.
Recent advancements in energy storage technology could finally make renewables, such as wind and solar, truly viable economic alternatives to fossil fuels when it comes to generating power. The ability to store power bridges the reliability gaps that occur with renewables, when, on any given day, the sun just doesn’t shine bright enough or the wind doesn’t blow hard enough to feed the hungry power grid. 

IoT: Hottest technology to watch out for in 2015, Economic Times, January 8, 2015.
A recent interaction with Gartner, Intel and Sapient Global Markets highlighted that 2015 will witness the emergence of a plethora of Internet of Things (IoT) based products and solutions, fired by consumer and business needs and catalysed by maturing underlying technologies.

Comprehensive Data Intelligence: Empowering the Energy Marketplace, Energy Digital, January 5, 2015.
Energy companies today face an unprecedented level of market flux and regulatory complexity. To make informed strategic decisions in such an environment, these companies need access to richer and more comprehensive market data than is currently available. In this article, Arun Karur explains how companies can improve trading decisions and better manage their portfolio risk and compliance requirements by utilizing actual and significant market data.

Oil's not well, Business Today, January 5, 2015.
Oil prices have been headed south for the last six months, almost halving in value in the period. On December 24, prices of Brent crude - to which most Indian imports are linked - fell to $60 a barrel. It has come as a respite to oil importing countries, including India, easing inflation and inflationary expectations. India imports 78 per cent of its crude requirement. In 2013/14, India paid $105 a barrel on average to import crude oil worth $168 billion - it stacks up to more than one-third of the country's import basket. 

The Impact of Reg SCI, Waters Technology, January 2, 2014.
Article focusing on how Reg SCI will affect not just those the mandate looks to regulate, but the entire market. 

December 2014

The Pursuit of Collateral, Six Securities Services, December 2014.
Headlines about collateral shortfalls have been muted in the last year or so, but the penalties for being left short – effectively being cut off both from traditional sources of funding and from key markets and clients – are such that no one is taking any chances.

2015: Top Ops Goals for Surviving the Regulatory Crush, FinOps Report, December 31, 2014.
With the beginning of 2015 just hours away, middle and back office operations specialists across the globe should count on a visit from C-level executives to set the tone for the new year. 

IT trends in financial and commodity markets in 2015: Sapient, InfoTech Lead, December 26, 2014.
Sapient Global Markets, a division of Sapient and a provider of technology and consulting services, shared IT trends in financial and commodity markets in 2015.

Combatting the lack of a formal standard in derivatives reporting, FTSE Global Markets, December 22, 2014.
Now that some of the dust has settled following the implementation of several regulatory initiatives, such as Dodd-Frank, MiFID II/MiFIR, and European Market Infrastructure Regulation (EMIR), many financial institutions are grappling with how to deal with the impact these initiatives have had on their derivatives business. In this article, Phil Matricardi, who manages the Clearing Connectivity Standard for the communication of cleared OTC derivatives data on behalf of ISDA and Adam Kott, a senior associate business consultant based in New York, discuss why firms are adopting the new ISDA Clearing Connectivity Standard (CCS), introduced two years ago, for derivatives reporting and communication and why an industry utility for data transformation is a necessary next step.

Lynn Strongin Dodds looks at how different providers are leveraging the new collateral management world to win and retain clients.

Mixed signals for crude, but a sharp price rise not imminent,, December 22, 2014.
Last Tuesday, Reserve Bank of India governor Raghuram Rajan had cautioned against the possibility of a reversal in the downtrend in global crude and prices rising on the back of geopolitical risks. He happened to be the first person in the world to have sounded such a caution. There was a slight jump in crude prices on Saturday from the lowest closing levels since May 2009 after Saudi Arabia’s oil minister said on Friday that the slump in prices was temporary, but added in the same breath that it would be “difficult, if not impossible” for Opec to curb its oil production amid a glut.

Resourcing multiple regs major challenge for 2015, The Trade, December 19, 2014.
Balancing resources to deal with multiple different regulations being implemented over the coming years will be a key challenge for buy-side firms in 2015, according to Sapient Global Markets.

Grid security is one of our greatest national vulnerabilities: An interview with James Woolsey, former Director of the Central Intelligence Agency, Forbes, December 17, 2014.
America’s power grid may be the nation’s proverbial Achilles heel. For over a decade, scientists and intelligence professionals have been shouting at the federal government to do something – anything – to protect and strengthen the grid from a cataclysmic collapse, which could leave much of the nation in the dark for months, possibly even years. So far, though, it seems their concerns have fallen on deaf ears, as little, if any, concrete action has been taken to shore up grid security.

Battery storage to transform power market models, Energy Risk, December 16, 2014.
The development of economical battery storage could rewrite the rules of electricity trading and create a need for newer and more sophisticated models, say market participants. 

Time running out to clean the collateral pipes, Financial News, December 11, 2014.
When the 2009 G20 summit in the city produced the outlines of a post-crisis settlement – shoring up bank balance sheets and reducing the risk of over-the-counter derivatives trades by pushing most of them through clearing houses – many feared there would not be enough collateral to get the job done. Inevitably there have been delays in bringing the regulations into force, and in the resulting breathing space it became clear that there were enough high-quality assets to act as ballast for the reconstructed financial markets if – and it was a big if – the back offices of the world’s financial institutions could move the collateral about more quickly than they had ever done. Next year the breathing space ends with a vengeance as regulatory deadlines requiring extra collateral fall within months of each other. 

As Clearing Issues Grow Costly, the Buyside Is Pushing Back, Traders Magazine, December 11, 2014.
Large buyside institutions and trading desks that utilize OTC derivatives, most notably interest rate swaps, are waking up to an uncomfortable new reality in the post-Dodd-Frank world - the coming cost of mandatory clearing of OTC derivative products. As a result, conversations over clearing costs are migrating to the forefront of the ongoing debate over OTC derivative clearing, even changing how the buyside looks at these instruments. More importantly, the buyside also is searching for ways to alleviate these costs, and may have hit upon one - pressure the smaller banks and brokerages they do business with to offer clearing services, thereby increasing competition in the marketplace and lowering costs overall. 

Gas hits $2.67 a gallon and America celebrates by buying gas-thirsty SUVs and trucks, The Guardian, December 10, 2014
Oil is down to $2.67 a gallon, so Americans are buying a lot more SUVs and pickup trucks. Are US drivers giving up on renewable energy while gas prices are low? 

Have Europe’s managers prepared for Annex IV reporting?, Global Custodian, Winter 2014.
The first wave of Annex IV reporting under AIFMD has come into force for some European firms; however, many have largely underestimated the sheer cost and workload required to comply. 

Time is short to get final building blocks in place, Financial News, December 8, 2014.
Next year may be when the chickens of Pittsburgh come home to roost. When the 2009 G20 summit in the city produced the outlines of a post-crisis settlement – shoring up bank balance sheets and reducing the risk of over-the-counter derivatives trades by pushing most of them through clearing houses – many feared there would not be enough collateral to get the job done. 

Energy evolution set to reshape risk management, Energy Risk, December 5, 2014.
During the next 20 years, the energy industry is expected to undergo transformational technological change, shaking up traditional patterns of correlation between different energy markets and creating demand for new types of instruments and more sophisticated risk models. 

ESMA Does EMIR Housekeeping, Inside Reference Data, December 2, 2014.
Market participants operating in the European Union have had to report over-the-counter derivatives trades since February, and valuations and collateral data since August. With reporting under the European Market Infrastructure Regulation (EMIR) now established, the European Securities and Markets Authority (ESMA) is soliciting input from firms and other stakeholders about its reporting and technical standards.  

November 2014

Industry Questions Reg SCI's Effectiveness After SEC Vote, Traders Magazine, November 20, 2014.
After 18 months of consultation with the cash-equities market participants, the U.S. Securities and Exchange Commission voted to approve Regulation Systems Compliance and Integrity (Reg SCI) on November 20. But the jury is still out among industry members as to whether it will accomplish its goals. Under the new regulation, self-regulatory organizations (SROs), certain alternative trading system (ATS) operators, market data plan processors and certain exempt clearing agencies will be required to have comprehensive policies and procedures in place for their technological systems. 

Other Voices: The key to transforming the fund manager/prime broker relationship, Opalesque, November 20, 2014.
In response to the financial crisis, financial markets across the world are transforming themselves. One of the most significant changes happening today is in the Prime Broker/Fund Manager relationship —a world in which Prime Brokers (PBs) provide a variety of services to Fund Managers. The Fund Manager’s alpha generation bottom-line and the Prime Broker’s services-based business model were both impacted by the turmoil in the financial markets, prompting a restructuring of the industry and a transformation of the industry’s operating model. 

REMIT: Bringing Physical Commodity Trading into the Regulatory Spotlight, Oil & Gas Monitor, November 19, 2014.
As far back as the 1986 Financial Services Act, regulators in the UK have had the authority to oversee activities related to commodity derivatives, but until recently, their presence was negligible. Despite the advent of the Financial Services and Markets Act in 2000 and a move from self to statutory legislation, the regulatory focus on commodities remained limited. The weight of rule-making was restricted to just two small handbooks—one for energy market participants (EMPs) and one for oil market participants (OMPs). With the Regulation on Wholesale Energy Market Integrity and Transparency (REMIT), however, that is about to change. In this article, David Wardley and Owen LaFave discuss REMIT, its anticipated impact and what companies need to do to ready their organizations for compliance. 

BMO Consolidates Trading Data With An Investment Book of Record (IBOR), Forbes, November 18, 2014.
Indeed a recent SimCorp survey found that although 83 percent of buy-side respondents think intraday calculations are important, only 23 percent can perform them. Duncan Cooper, director of business consulting at Sapient Global Markets, said that’s cause for concern. ““The inability to understand the impact of market events on the position of held securities has far reaching effects such as: errors in NAV calculations, inability to optimise collateral, erroneous cash positions, investor exposures in the event of a market readjustment – all of which inevitably impacts investor confidence.” 

Multiple Prime Utility: the key to transforming the fund manager/prime broker relationship, FTFNews, November 18, 2014.
Since the financial crisis, Fund Managers have increasingly moved away from using a single custodian and diversified their risk by splitting the basket under multiple Prime Brokers (PBs). This has provided them with an opportunity to utilize different partners for the different services that they offered, diversifying their asset portfolio mix and market reach. 

SEFS: A SLOW START SO FAR, DerivSource, November 18, 2014.
Although expectations ran high, swap execution facilities (SEFs) have not taken the derivatives trading world by storm. In fact, instead of a brave new era, the landscape looks similar with voice trading remaining a firm fixture and incumbents dominating the electronic front. If the past is any guide to the future, though, then alterations will be gradual.  

Optimism and opportunity: Key themes at FIA EXPO 2014, Futures Magazine, November 17, 2014.
Jim Myers of Sapient Global Markets recaps some of the key themes observed at FIA EXPO 2014 in Chicago. 

Job tests for graduates grow in Indian market, Times Higher Education, November 17, 2014.
Angst over the perceived “skills gap” and a dearth of trained workers is growing. Meanwhile, many complain that typical college transcripts say little about what someone knows and can do in the workplace. One way for employers to find better job applicants might be to require all potential hires to take a test. This “GRE-for-job” assessment could measure both soft and hard skills. Employers might even require all job-seekers to get a minimum cutoff score. 

Esma Looks to Improve Trade Reporting, Markets Media, November 14, 2014.
The European Securities and Markets Authority, the financial regulator for the European Union, is consulting on how to improve data from trade reporting which will be critical in setting policy under new trading regulations. Under MiFID, regulations covering trading in the European Union which into force in 2007, certain trades had to be reported through an approved reporting mechanism. From 12 February this year new reporting requirements came into effect under Emir, the European Market Infrastructure Regulation covering derivatives, central counterparties and and trade repositories. Since February both sides of trades have been required to be reported to an authorised trade repository and the product range was expanded from MiFID to include over-the-counter and exchange traded derivatives and commodities, credit, interest rate and equities. 

Standardized Tests for the Job Market, Inside Higher Ed, November 14, 2014.
Angst over the perceived “skills gap” and a dearth of trained workers is growing. Meanwhile, many complain that typical college transcripts say little about what someone knows and can do in the workplace. One way for employers to find better job applicants might be to require all potential hires to take a test. This “GRE-for-job” assessment could measure both soft and hard skills. Employers might even require all job-seekers to get a minimum cutoff score. 

Both Calamity and Catalyst: Reflections on This Centennial Moment in Financial Services, The Journal of Trading, Fall 2014.
We have reached a Centennial Moment in the global financial services industry. It has been almost a century since the Stock Market Crash and subsequent Great Depression compelled profound changes to the system that underpins not just investment and commerce, but our very way of life. The Financial Crisis of 2008 has yet again prompted scrutiny of business models, policies, and processes. While these two transformational moments certainly share some causality, in many ways we are equally as blind today to the long-term consequences of our efforts to re-order as regulators and industry captains were in the last century. Adding to the confusion, the evolution—and intersection—of financial and digital technologies will continue to be disruptive. Firms are being forced to simultaneously industrialize their operations and offer clients a new experience, while shedding risk as a driver of revenues and moving toward more fee-based models. By definition, this dilemma will temporarily pressure cost ratios as expenses rise ahead of profits. The winners in next-generation financial services will be those whose investments in user connectivity and experience—including mobility—arm them for the battle to come, not the one just past. 

Calculating the Clearing Threshold: Challenges for Non-Financial Counterparties in the European Union, TabbFORUM, November 12, 2014.
While EMIR mandates clearing and reporting requirements on OTC derivatives for financial counterparties, it exempts non-financial counterparties (NFCs) from parts of reporting and clearing requirements until their positions in proprietary trades remain within a pre-defined clearing threshold. In order to avoid the infrastructure and process costs for the increased EMIR reporting and risk management responsibilities, every NFC has to closely monitor its vulnerability to breach that mandated clearing threshold. 

Statkraft upgrades energy trading and risk platform to better manage renewable energy markets, FierceFinanceIT, November 11, 2014.
As Europe's largest producer of renewable power, Statkraft operates in a market that has undergone major shifts in recent years. With European regulations encouraging the use of renewable energy before energy from conventional power utilities, energy producers and traders are increasingly using sophisticated calculations to not only predict energy demand, but also to predict supply of renewable energy, whose production levels can vary based on weather conditions. Serving as a virtual power plant, combining and organizing all these different sources to fulfill the demand of the market, Statkraft decided to upgrade its energy trading and risk management (ETRM) platform for maximum flexibility. The company wanted to increase the amount of data and risk measures available to manage their positions and to ensure scalability for future growth. 

Commodity Business Awards 2014 – Shortlisted Candidates, Commodities Now, November 11, 2014.
Commodities Now announces the shortlisted candidates for the 2014 Commodity Business Awards, which reward excellence throughout the commodity industry supply chain in trading, risk management, structuring, finance, research, advisory, logistics, legal, and specialist technology.

An Oil Price ‘Cold War’ With Saudi Arabia?, PeakOil, November 10, 2014.
Last week, Saudi Arabia slashed its crude oil prices for the second month in a row – and unlike the last discount, this was exclusively for the U.S. market. Saudi oil minister Ali Al-Naimi, the country’s top energy official, attends a meeting Sept. 11 in Kuwait. Some experts declared it the start of a “cold war” with Saudi Arabia, as described by two University of Texas professors in an op-ed in the Dallas Morning News. Other analysts, however, contend that the Saudis are merely trying to defend against other exporters to the U.S. 

As Saudis Target Shale Industry, U.S. Considers a Response, Forbes, November 7, 2014.
If it wasn’t clear before, it should be now. The Saudis have put a bull’s-eye on the U.S. shale industry. This week the Kingdom cut the selling price for its crude for the second straight month in a row. But unlike the last time, the Saudis only cut their price for oil bound for the U.S. market and nowhere else. Indeed, they actually increased the selling price of its oil to Asia and Europe, much to the relief of fellow OPEC members. There is now growing concern among investors that such low prices may force many U.S. shale producers to close up shop. Indeed, Deutsche Bank claims that 40% of U.S. shale oil production scheduled for 2015 would be uneconomic below $80 a barrel, a damning statistic. 

Buy-side Pressures, Derivatives Report, November 2014.
Recent change in the OTC derivatives markets has focused on minimizing systemic risk to the financial system. Firms subject to mandatory clearing requirements are being impacted by increased costs with an adverse effect on profitability. Some key areas of impact include market liquidity, trading execution costs, dealer funding costs, technology expenditures as well as the financial instrument types utilized for investment and hedging decisions.

FIA: Jim Bennett, FIA, November 5, 2014.
Jim Bennett speaks with Joanne Morrison of Futures Industry Association (FIA) to discuss clearing and other regulatory topics. 

As Clearing Issues Grow Costly, the Buyside is Pushing Back, Traders Magazine, November 4, 2014.
Large buyside institutions and trading desks that utilize over-the-counter derivatives, most notably interest rate swaps, are waking up to an uncomfortable new reality in the post-Dodd Frank world—the coming cost of mandatory clearing of OTC derivative products. As a result, conversations over clearing costs are migrating to the forefront of the ongoing debate over OTC derivative clearing, even changing how the buyside looks at these instruments. More importantly, the buyside also is searching for ways to alleviate these costs, and may have hit upon one: pressure the smaller banks and brokerages they do business with to offer clearing services, thereby increasing competition in the marketplace and lowering costs overall.

Oil price swings come too late for banks who made desk cutbacks, Financial Times, November 4, 2014.
The recent big decline in oil prices has helped not just car owners but Wall Street commodities desks too. Years of static commodities markets have slashed revenues because banks’ trading partners – corporate clients and hedge funds – have had less impetus to protect against, or place bets on, price moves. The commodities revenue earned by the 10 biggest banks in the sector fell from $14.1bn in 2008 to $4.5bn last year, according to Coalition, a research group.

TECHNOLOGY: OMG! WHAT’S HAPPENED TO THE OMS!, Funds Europe, November 3, 2014.
Changes in technology, investment strategy and the regulatory environment have all conspired to alter managers’ IT infrastructure. Nicholas Pratt looks at how these changes have affected vendors of order management systems. Later this month the tenth Funds Europe awards ceremony takes place. Among the 22 prizes will be four dedicated to the best technology products and services available to investment managers. The changing entrants and the categories reflect the extent of change in technology, investment strategies and firms’ business objectives that have taken place in these ten years. These changes are evident in the developments in order management systems (OMS) which were once installed at the heart of a firm’s IT infrastructure bringing order to their front-office activity. As a result of cost pressure, firms are now looking to reduce the number of front-office systems that they employ, including OMSs.  

The Undead Enron Model Returns to the World above Ground, AllAboutAlpha, November 2, 2014.
Our readers are probably aware by now that Mercuria has closed on its purchase of JP Morgan’s energy trading business. The deal was done on the third of October. It appears that we’re coming full circle. Regulators and central bankers are now chasing the bank holding companies out of the market, and since somebody is going to do the crucial work of market mediation/greasing/hedging, those merchants who have stuck it out, like Mercuria, are the natural beneficiaries.

October 2014

Industry goes innovative with staff referral plans; offers attractive rewards, Economic Times, October 31, 2014.
From now on, it would also give away digital SLR cameras, along with smartphones. "It is a task to get engineering and computer science candidates with niche skills in the semiconductor space," said Chief Operating Officer Vijay Mohan. Last year, it offered trips to Mauritius, and now plans to roll out European holidays that will likely get more traction, Mohan said.  

The new London gold ‘fix’ – the battle has commenced, Mineweb, October 30, 2014.
With the new procedures for setting London benchmark prices for silver (Thomson Reuters/CME Group) and platinum and palladium (The LME) the battle for the big prize – setting the London benchmark gold price (the gold fixing as it has been designated for much of the past century) – commenced with a seminar on October 24th in London. This was conducted by the London Bullion Market Association (LBMA) and provided the five entities in the frame for setting the new benchmark the opportunity to present their cases. Their full presentations are available for viewing on the LBMA’s website. 

Single-Dealer Platforms Could Open Up, Markets Media, October 29, 2014.
The next evolution of single-dealer platforms could involve the largest banks offering rival services and products on their systems according to consultancy Sapient Global Markets. Sean O’Donnell, director of technology at Sapient Global Markets, wrote in “Crossings: The Sapient Journal of Trading & Risk Management” that the number of single dealer platforms has risen dramatically over the last five years leading to commoditization and difficulty in standing out in a crowded marketplace. One of the solutions could be for leading banks to allow services and products from other institutions to be traded on their SDP. 

Pursued By a Bear: Implications of Banks Leaving the Traded Energy Markets, TabbFORUM, October 29, 2014.
With investment banks winding down or selling off their energy trading divisions, there is a void developing in the traded market. What are the reasons for the banks’ exit, what will be the impact on market participants, and how might the market respond to these changes over time? 

Exchange-traded derivatives trading set to soar, The Trade, October 28, 2014.
Trading in futures and options has surged during the last two months and activity could continue upwards as the market begins turning to exchange-traded products in place of OTC derivatives. Volatility has returned to the markets during September and October following a relatively placid year of trading across the US and Europe. This injection of this volatility coupled with the increasing cost of trading OTC derivatives has led to a wave of trading across futures exchanges, particularly in the US where platforms have seen daily and monthly records. 

All Eyes on IBOR, Markets Media, October 27, 2014.
The Investment Book of Record can be considered the Holy Grail of investment operations, providing managers with a near real-time view of a firm’s positions. Without an IBOR system, the front office must either work off partial and out of date data, or produce IBOR figures manually, according to Todd Healy, vice president and head of investment operations at BMO Asset Management. For the back-office, the benefits of having an IBOR are related to having an independent view of positions. In addition to IBOR’s ability to minimize risk for the front and back-office, IBOR assists investment managers in complying with an onslaught of regulatory reforms. 

DTCC’s Institutional Tri-party Repo Clearing: Great Idea…Maybe, FinOps Report, October 24, 2014.
A recent proposal by the Depository Trust & Clearing Corp. to serve as the middleman for a large chunk of the institutional tri-party repo market through its subsidiary Fixed Income Clearing Corp. might sound like a great way to reduce counterparty risk and the potential for fire sale of collateral, but with so few details unveiled thus far fund managers are having a hard time embracing the idea. From what operations directors at several US fund management shops tell FinOps Report, DTCC is touting the merits of funds joining the FICC as “limited participants” as a no-brainer. Yet until the US Securities and Exchange Commission publishes the DTCC’s request for a rule change, fund managers have only the preliminary concepts the DTCC has floated through a recent press statement and what officials have told media outlets — too little to know how exactly the new membership category will operate or what it will cost. 

Sapient Global Markets named "Best Consultancy" and "Best Regulatory Compliance Solution for Operations", FTF News, Summer/Fall 2014.
Sapient Global Markets is honored to be named Best Consultancy for Operations as well as Best Regulatory Compliance Solution for Operations for its Compliance Management and Reporting System (CMRS) by FTF News for the 2014 Technology Innovation Awards. 

Time to Protect the US Shale Revolution?, Forbes, October 17, 2014.
The recent plunge in oil prices may be welcome news to drivers, but it is bad news for the nation’s burgeoning shale energy industry, which has grown significantly over the last few years thanks to advances in technology, as well as from a relatively strong and stable oil price. All of this volatility may pose a real danger to the Shale Revolution if it causes risk-adverse investors to abandon the oil patch and look for more stable returns elsewhere. Such a scenario would not only hurt the new shale economy, costing thousands of jobs and billions of dollars in GDP, but would also deliver a major blow to the nation’s new-found energy security. 

SEFs still looking for the buy-side to bite, The Trade, October 17, 2014.
New ways of attracting buy-side participation on swap execution facilities (SEFs) are emerging after a year of relatively slow progress for the US electronic trading platforms. SEFs launched in October last year in line with regulatory mandates for OTC swaps to be executed electronically on the venues and then centrally cleared. Following their introduction, 50% of interest rate swaps and 70% of credit default swaps are now traded on SEFs, though buy-side uptake of the new form of trading has been slow.  

Gas might be priced 15% lower on fall in crude rates, Business Standard, October 16, 2014.
With global crude oil prices hitting a four-year low, global gas buyers, led by those from Japan, are asking sellers to shift to gas-to-gas pricing, rather than linkage with crude oil prices. In India, the notified Rangarajan formula, which is yet to be implemented, has attempted such a linkage by considering the average price of the gas imported, as well as those in global markets. Most of this gas remains linked to crude oil prices.  

Implementing Volcker: data and reporting challenges, Wall Street Letter, October 2014.
After a lengthy development period, the Volcker rule (section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act) finally hit the regulatory statute books on December 10, 2013. For most firms, the initial focus has been on restructuring legal entities, booking models and trading books which extended to the disposal of their proprietary trading (prop trading) businesses. Now, however, attention has turned to the challenges around data and compliance reporting. Although the final Volcker rules reduced the possible list of metrics reporting to just seven, daily data aggregation and consistency is posing problems for many firms whether above or below the $50bn threshold.  

Shifting market structure prompts energy trading firms to look at lifecycle management, FierceFinanceIT, October 15, 2014.
Tighter margins and the availability of an increasing amount of data is prompting energy trading firms to begin looking to better analyze data and optimize processes, but many firms in energy trading, are still wrestling with integrating disparate data silos, according to Sapient Global Markets. 

Pressure mounts on regulators to consider FX SEF phase-in, The Trade, October 14, 2014.
US regulators are being urged to employ a phase-in period for foreign exchange derivatives to be traded on swap execution facilities (SEFs) after they become subject to mandatory clearing. The US Commodities Futures Trading Commission (CFTC) met last week to discuss when FX non-deliverable forwards should be centrally cleared, a decision market participants have been awaiting for some time. Once that mandate is passed, the regulator will then aim to increase transparency by requiring all NDF FX trades to be executed electronically.  

Cross-Asset Universal Product Identifier: The Solution the Industry Is Looking For?, Wall Street & Technology, October 14, 2014.
A UPI will enable a holistic approach to identifying all trades and positions. While such an idea sounds great in theory, historical attempts at achieving global agreement have fallen short. 

Northern Trust in conversation with ISS Magazine, ISS Magazine, October 13, 2014.
Fiona Horsewill, head of EMEA Product, Northern Trust, in conversation with ISS discussing the extent to which technology vendors and custody service providers assist asset managers in overcoming the challenges of new regulations.  

Collateral Management Utilities Could Be Way of the Future, Global Custodian, October 10, 2014.
As the financial services industry looks to cut costs where it can, utilities models have emerged as a viable option, and these mutualized services could further emerge for collateral management, finds Celent. In its new report, Fortress to Federated Models in Collateral Management, Celent says that firms are likely to move away from in-house collateral management toward outsourced, cloud offerings and then longer-term toward utilities. These technology changes also come at a time when collateral is becoming increasingly important across entire organizations, with Sapient Global Markets finding in a recent survey that the activity is having greater front-office implications.

Single Dealer Platforms: Are Their Days Numbered?, Wall Street & Technology, October 10, 2014.
While single dealer platforms (SDPs) have improved the experience presented to an institution's trading clients, they are not entirely fulfilling the core requirements in terms of openness or degrees of specialty. The needs of the institution and its clients are still too much at odds and this discord will drive the next revolution in client trading and information services. Sean O'Donnell and Matt Hopgood discuss the next generation of these platforms and the implications to business and technology strategies. 

Firms Face Difficulty In Performing Intraday Calculations - Survey, Global Custodian, October 9, 2014.
A survey from tech firm SimCorp has found only a fifth of US capital market firms are able to perform intraday calculations, prompting concerns on how well they are able to change their positions in response to market driving-events. According to the poll, which interviewed over 60 executives from U.S.-based firms, only 23% are able to carry this out.  

Only 23% of Buy Side Can Perform Intraday Calculations, Wall Street & Technology, October 9, 2014.
According to a recent poll of more than over 60 capital market executives by SimCorp, a provider of investment management services, 83% of buy-side respondents place a high importance on the ability to perform intraday calculations, but only 23% said they are able to perform these calculations. Intraday calculations help firms better comprehend the impact of market events on their held securities during trading hours, rather than wait for an end of day report. The ability to perform intraday calculations impacts a variety of business decisions, including NAV calculations, the ability to post and optimise collateral, and perform more accurate risk analysis. 

Custodians Face Trade Reporting Headache Amid ESMA Deadline, Global Custodian, October 9, 2014.
Custodian banks active in the delegated reporting space are scrambling to fill the gaps of missing information as another deadline set for European trade repositories loom. The European Securities and Markets Authority (ESMA) has told Europe’s trade repositories (TRs) that from December 1, 2014, they must reject trade submissions where certain reportable fields have not been supplied, according to a notice from the Depository Trust & Clearing Corporation (DTCC).

Integrating Voyage Partners: Straight-through Processing in Tanker and Bulk Commodity Shipping, Breaking Energy, October 8, 2014.
While marine transport enables the lion’s share of global trading in bulk commodities today, the business-to-business (B2B) information integration across the value chain of a voyage has yet to evolve. As both the shipping industry and commodity merchants face tighter profitability, they need to look at a holistic approach to improve efficiency and data quality through information integration. In this article, Thomas Pappas, Jay Rajagopal and Rashed Haq discuss a way to harness emerging information services and technology platforms.  

Does it make sense for businesses to procure solar panels?, Breaking Energy, October 8, 2014.
While marine transport enables the lion’s share of global trading in bulk commodities today, the business-to-business (B2B) information integration across the value chain of a voyage has yet to evolve. As both the shipping industry and commodity merchants face tighter profitability, they need to look at a holistic approach to improve efficiency and data quality through information integration. In this article, Thomas Pappas, Jay Rajagopal and Rashed Haq discuss a way to harness emerging information services and technology platforms.

Exchange Technology in Focus, Markets Media, October 7, 2014.
While some market participants and observers believe automation and speed are over-emphasized in exchange trading, there is broad agreement that on balance, technology has massively increased efficiency, and there is no turning back. Regulatory pilot programs that aim to boost liquidity by widening ‘tick sizes’ in trading of certain small-capitalization stocks are in effect rolling back technology, but only at the margin, and it’s unclear whether such programs will stick.  

The business case for industrialisation of market utilities, DerivSource, October 2, 2014.
The retail derivatives industry faces the same challenges seen in many mature financial markets: slow growth, heightening competition, increasing regulatory requirements and demanding clients. In this article, Sapient Global Market's Stefan Naumann, Patric Mayer and Roger Waldhausen discuss how the automation of product platforms can help banks proactively maintain and expand their market share and highlight the different options to get there. 

Managing Compliance from a Single Platform, Inside Reference Data, October 1, 2014.
Northern Trust says it has improved post-trade OTC reporting for clients since deploying Sapient's Compliance Management Reporting System. The solution brings into a central source data that traditionally was maintained across several different operations. With differing requirements across jurisdictions and repositories; differing timing and frequency requirements; the introduction of new identifiers such as the USI; differing data element requirements, it is no wonder firms have found compliance onerous. Northern Trust have been able to work with one core, clean data set that can then be transmitted to the CMRS and transformed for specificity to whatever regime or repository their client is reporting to.

After warm-up, custodians ready for the long game of OTC reform, Global Custodian, Fall 2014.
With the initial rollout of the Dodd-Frank Act done and dusted, custodians are confident in preparing for the next phase of OTC derivatives reform. Over the next two years, the buy side, which never before dealt with regulation like those the U.S. Commodity Futures Trading Commission (CFTC) was issuing, educated itself, implemented the necessary changes to their operations and met their regulatory obligations.  

September 2014

Northern Trust Supports Client Reporting with Sapient Global Market’s CMRS Platform, Reference Data Review, September 26, 2014.
Northern Trust is up and running with a delegated client trade reporting service based on the software-as-a-service (SaaS) version of Sapient Global Markets’ Compliance Management Reporting Solution (CMRS). The solution supports Northern Trust in fulfilling its clients’ derivatives reporting requirements under EMIR and Dodd-Frank, and eases the burden of keeping up with regulatory change. 

Northern Trust Sets Up Delegated Reporting with Sapient, Waters Technology, September 26, 2014.
Northern Trust is now able to offer delegated reporting to its buy-side clients, after implementing the Compliance Management Reporting Service (CMRS) platform from Sapient Global Markets. With the new system, Northern Trust will be able to provide services that are compliant with both the Dodd-Frank Act and the European Market Infrastructure Regulation (EMIR), both of which govern derivatives reporting. 

Andy Hall: Long And Wrong In The Oil Market, Forbes, September 26, 2014.
Is Andy Hall on to something? The legendary oil trader is reportedly telling his investors that America’s shale energy boom will be coming to a swift end, sending oil prices skyward to $150 a barrel over the next five years. Such bold predictions helped Hall amass a small fortune; he was once awarded a $100 million bonus for his oil trading genius and bought a castle in Germany. So his words are being taken very seriously by the energy community, but that doesn’t mean everyone agrees. 

Compliance solution by Northern Trust and Sapient, Asset Servicing Times, September 25, 2014.
Northern Trust and Sapient Global Markets have launched a new solution in compliance management. Compliance Management Reporting Solution (CMRS) will be available to Northern Trust clients and will deliver delegated reporting requirements for the Dodd-Frank Act and the European Market Infrastructure Regulation for all derivatives, including over the counter/exchange traded, cleared/bilateral and foreign exchange. 



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