Maximising SFTR benefits
27 June 2019
Markus Büttner of Comyno explains why firms shouldn’t implement SFTR with a sole view on reporting requirements
Image: Shutterstock
The Íø±¬³Ô¹Ï Financing Transactions Regulation (SFTR) is at everyone’s door now. Since the timeline is set by the regulators, discussions are progressing and the first customer projects have are kicking off. There have been many articles published about SFTR business requirements in general, but this one will focus on Comyno’s unique strategy towards getting the maximum returns out of the new reporting regulations for our clients and how it correlates with our company goal of supporting the market with best of breed software and services.
What is the key for us when we think of SFTR?
As experts for all business and technical matters in securities finance, we have one simple message: do not implement SFTR with a sole view on the reporting requirements, but have a second thought about the synergies for the business it can create if you do it right.
From our point of view, there is huge potential in turning the cost you are forced to bear for SFTR into real benefits for your business. Therefore, it is essential that traders and collateral managers jump on the SFTR train in an early stage of the project, to better understand what it is about, to be able to add business ideas to the project and make use of synergies the reporting has to offer.
Why are we convinced that there aresuch synergies?
This has a lot to do with the many projects we already did in the securities finance arena in general and specifically in the area of collateral optimisation. Clearly, we see that firms who have put effort on a collateral optimisation strategy will have torn down their internal (product) silos already.
They will have a consolidated view on the firm-wide collateral portfolio and will have implemented the necessary infrastructure to efficiently manage liquidity and risk while increasing their revenues at the same time. If your firm has invested in such an infrastructure environment already, the implementation of the new reporting will be an easier task because SFTR is requiring exactly that consolidated data of all your securities finance transactions across asset classes and business units and is a full view on the firm-wide collateral portfolio.
If your firm has not yet invested in such a consolidated infrastructure—SFTR will force you to do so at some point further down in the value chain. This is exactly the point when Comyno comes in to help to define how to bring all of the collected and required data into the right place and format. As a result, your company will be able to report SFT properly and will increase the efficiency of collateral allocation at the same time.
This business-driven approach led towards our decision, to implement and offer a full-scale SFTR system solution to the market instead of just providing a tool to collect the required data and fill the fields in the reports.
Our C-ONE trading/collateral management and C-ONE connectivity/reporting platform initially was built embedding the SFTR requirements as their core data structure. Now we are continuing with adding the missing pieces to deliver SFTR reporting fully in line with the regulator’s requirements.
To better explain our software approach to SFTR, a reminder of the current Comyno C-ONE enterprise version seems appropriate. The innovative C-ONE Enterprise suite offers a complete solution for Íø±¬³Ô¹Ï Finance Trading and Collateral Management, covering the complete value chain of the corresponding transactions.
It is built as a ‘hybrid platform’—incorporating features for an in-house trading and collateral management system and a multi-entity, multi-product trading platform across asset classes.
This enables our clients not only to manage their whole securities finance business with C-ONE but also grants online access to and for their clients and counterparts including white-labelling potential simply via the web.
Not only does this provide seamless possibilities for position sharing, but also locates management as well as affirmation processes.
Furthermore, clients and counterparts can see their side of the trading activity as well as their side of the collateral- and exposure management. Even the PnL features can be used by all entities with access to the platform.
If the word existed (maybe it does from now on), we would call C-ONE a ‘tribrid platform’—because it incorporates total connectivity to every internal and external system or third party entity which might be imagined. This includes the possibility to connect with various distributed ledger technology platforms as well.
To stick to our word of the ‘one-stop-shop’ slogan, the next logical step was to include SFTR into our product suite since we wanted to keep our other promise, to be able to provide all system features as single modules as well.
In other words, the SFTR functionality can also be used as a stand-alone tool for SFTR reporting from your legacy SFT in-house systems, or out of the box for firms already using our full enterprise suite.
One of the biggest cost drivers for the industry is the multitude of internal and external parties involved in securities finance transactions, the variety of software systems and IT components as well as a big number of manual workarounds and interfaces which are necessary to fill gaps in the underlying systems.
Comyno has done no less than tackle this industry challenge for the benefit of our market with its solution: C-ONE Enterprise with all its different modules is now covering the whole value chain, both from a business and technical perspective.
Just imagine for a second
From generating the trade idea, finding your counterparty, online-negotiation, affirmation and trade booking, unique transaction identifiers (UTI) generation, collateral allocation or triparty import, reconciliations and feeding the trade to your in-house systems, settlement and SFTR reporting—all this now can be performed fully straight through on one platform which is our C-ONE Enterprise.
What is the key for us when we think of SFTR?
As experts for all business and technical matters in securities finance, we have one simple message: do not implement SFTR with a sole view on the reporting requirements, but have a second thought about the synergies for the business it can create if you do it right.
From our point of view, there is huge potential in turning the cost you are forced to bear for SFTR into real benefits for your business. Therefore, it is essential that traders and collateral managers jump on the SFTR train in an early stage of the project, to better understand what it is about, to be able to add business ideas to the project and make use of synergies the reporting has to offer.
Why are we convinced that there aresuch synergies?
This has a lot to do with the many projects we already did in the securities finance arena in general and specifically in the area of collateral optimisation. Clearly, we see that firms who have put effort on a collateral optimisation strategy will have torn down their internal (product) silos already.
They will have a consolidated view on the firm-wide collateral portfolio and will have implemented the necessary infrastructure to efficiently manage liquidity and risk while increasing their revenues at the same time. If your firm has invested in such an infrastructure environment already, the implementation of the new reporting will be an easier task because SFTR is requiring exactly that consolidated data of all your securities finance transactions across asset classes and business units and is a full view on the firm-wide collateral portfolio.
If your firm has not yet invested in such a consolidated infrastructure—SFTR will force you to do so at some point further down in the value chain. This is exactly the point when Comyno comes in to help to define how to bring all of the collected and required data into the right place and format. As a result, your company will be able to report SFT properly and will increase the efficiency of collateral allocation at the same time.
This business-driven approach led towards our decision, to implement and offer a full-scale SFTR system solution to the market instead of just providing a tool to collect the required data and fill the fields in the reports.
Our C-ONE trading/collateral management and C-ONE connectivity/reporting platform initially was built embedding the SFTR requirements as their core data structure. Now we are continuing with adding the missing pieces to deliver SFTR reporting fully in line with the regulator’s requirements.
To better explain our software approach to SFTR, a reminder of the current Comyno C-ONE enterprise version seems appropriate. The innovative C-ONE Enterprise suite offers a complete solution for Íø±¬³Ô¹Ï Finance Trading and Collateral Management, covering the complete value chain of the corresponding transactions.
It is built as a ‘hybrid platform’—incorporating features for an in-house trading and collateral management system and a multi-entity, multi-product trading platform across asset classes.
This enables our clients not only to manage their whole securities finance business with C-ONE but also grants online access to and for their clients and counterparts including white-labelling potential simply via the web.
Not only does this provide seamless possibilities for position sharing, but also locates management as well as affirmation processes.
Furthermore, clients and counterparts can see their side of the trading activity as well as their side of the collateral- and exposure management. Even the PnL features can be used by all entities with access to the platform.
If the word existed (maybe it does from now on), we would call C-ONE a ‘tribrid platform’—because it incorporates total connectivity to every internal and external system or third party entity which might be imagined. This includes the possibility to connect with various distributed ledger technology platforms as well.
To stick to our word of the ‘one-stop-shop’ slogan, the next logical step was to include SFTR into our product suite since we wanted to keep our other promise, to be able to provide all system features as single modules as well.
In other words, the SFTR functionality can also be used as a stand-alone tool for SFTR reporting from your legacy SFT in-house systems, or out of the box for firms already using our full enterprise suite.
One of the biggest cost drivers for the industry is the multitude of internal and external parties involved in securities finance transactions, the variety of software systems and IT components as well as a big number of manual workarounds and interfaces which are necessary to fill gaps in the underlying systems.
Comyno has done no less than tackle this industry challenge for the benefit of our market with its solution: C-ONE Enterprise with all its different modules is now covering the whole value chain, both from a business and technical perspective.
Just imagine for a second
From generating the trade idea, finding your counterparty, online-negotiation, affirmation and trade booking, unique transaction identifiers (UTI) generation, collateral allocation or triparty import, reconciliations and feeding the trade to your in-house systems, settlement and SFTR reporting—all this now can be performed fully straight through on one platform which is our C-ONE Enterprise.
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100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Íø±¬³Ô¹Ï Finance Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Íø±¬³Ô¹Ï Finance Times
