Due to the EMIR and Dodd-Frank (DFA) regulations in Europe and USA, this bank required a central clearing setup for standardised OTC derivatives through a central counterparty (CCP). Scope of the pre-study was also designed to identify the clearing setup by reviewing the option to connect to a clearing broker (CB), or to review the alternative which was to set up direct clearing membership. The project team was engaged for the pre-study to assess the regulatory impact on the client’s existing operating model, highlight potential gaps, and to then draft a management summary with recommendations, and to deliver a detailed implementation roadmap.
What did we do?
The ::projective team prepared an internal EMIR / DFA questionnaire to validate the existing setup (organisational, functional, technical, etc.), and compare and contrast this against regulatory requirements. ::projective facilitated a series of workshops with FO-to-Finance to identify potential performance gaps, and document the client’s current procedures.
The client team highlighted both required changes and the potential implications of these on existing processes to comply with regulatory requirements. Project work included assessing the clearing option, with the development of a supporting business case to drive a management decision on the target setup. The engagement’s final deliverable was to propose a detailed implementation roadmap with drill-down into single work packages.
What we delivered:
Detailed gap analysis on the regulatory requirements in contrast to the existing setup
Implementation roadmap with detailed work packages for each stream to comply with the EMIR / DFA requirements
Comprehensive overview of implications, gaps and changes in respect to existing processes
Implementation roadmap with underlying work packages and estimated implementation effort
Decision matrix with all options in scope including evaluation / proposal