Industry Priorities - Razor Risk

Challenges in the Capital Markets

Costs due to Capital increases
Costs due to Margin increases (Cleared and uncleared)
Regulations are changing sell/buy side relationships, some buy-side positions incur unacceptable cost to the sell-side
Compliance has been expensive but 2018 onwards should be more stable
Focus on cost reduction in the front office, greater ROE
Focus on cost reduction in the middle and back office – better automation to reduce costs and manual tasks
Giving senior leaders appropriate tools to make sense of the huge amounts of economic information delivered by analytics systems

Profit margins eroded on buy-side relationships
Buy-side portfolios can bring more cost than profit
Understanding where and who is driving capital charges (which products, desks, books, business lines)
Tracking the evolution of P&L up and down the hierarchy of traders, books, portfolios, desks and products
Tracking costs back to the underlying drivers
Improve reporting from post-event/reactive to real-time/proactive

The network effect – bigger is better, LCH dominates IRDs and ICE dominates CDS
Developing national / local capital markets via clearing can open up business by intermediating the trust relationships
Take the risk out of trading by introducing a CCP
Expensive to build and needs considerable subject matter knowledge

Everyone sees smartphone apps – setting expectations of the user experience
Corporate software is rarely as easy to use, or as appealing
Hardware gets cheaper so capabilities can expand
AI & Machine learning – should you be using it?
Enterprise wide analytics demands large scale processing with data aggregation across multiple business lines and systems
Aggregating data across a segmented organisation is a foundation to then produce enterprise wide analytics

Aggregate high quality portfolio data and track provenance
Acquire high quality market and scenario data
Map the organizational hierarchy
Calculate the analytics once
Present the current state across the hierarchy
Show the outcome of business ‘what if’ scenarios
- Reduce capital by desk and product
- Reduce margin by product and business line
- Understand P&L evolution versus costs
- Show the portfolio optimization opportunities
Integrate with Compliance platforms

Do you have portfolio data from across your enterprise in one place?
Do you have strong controls and monitoring on portfolio data?
Do you have your market data in one place?
Do you have strong controls and monitoring on your ‘golden’ portfolio data?
Do you have full scope pricing and analytics?
Do you have “What-if?” capabilities?
- On capital
- On margin
- On gross notional
- On P&L
Is your platform real-time?
Are your analytics and metrics focussed on senior leadership business decisions?

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