Treasury and Compliance [email protected]

Slide 1

©MISYS 2012

Recent Trends and Developments in Foreign Exchange Market

•Volatility and Instability of Foreign Currencies •Severe market shocks •Poor Liquidity •Economic Fundamentals •New higher levels of Transparency •Tightening Regulatory landscape •Product Innovation

Monday, 11 February 2013

Slide 2

©MISYS 2012

New Higher Levels of Transparency

•Equal and Simultaneous access to information by market participants. •Accurate pricing of assets and associated risk. •Smoother price adjustments & reduction of shocks.

Monday, 11 February 2013

Slide 3

©MISYS 2012

New Higher Levels of Transparency •Central Bank Policy – – Signaling around monetary policy – Open Market Operations •Public Announcements of Policy changes – Quick and broad announcements – Assimilation of information quickly and efficiently in price adjustments

Information Technology Information Technology – Cheap and Easy access to vast information – Bloomberg, Reuters, Internet – Data, Analysis and news – Access to data by Institutional Investors & Corporate Treasurers Evolution of the price discovery process – Electronic brokers – Electronic banking dealing systems – Smooth dissemination of current pricing – Improvement of Market Liquidity

Four Key Pain Points in the Drive to Increase Profits 1. Increase Revenues Launch new products more quickly, capitalise on trends before they become mainstream, increase cross sell rates, eliminate revenue leakage

Revenue

2. Reduce Risk Ensure single, integrated view of all risks, adapt to changes in regulatory reporting quickly and efficiently, ensure compliance with bank policy

Customer Service

Risk 3. Reduce Costs Reduce amount of custom development, shift to low cost channels, reduce human interaction, reduce number of systems, reduce customer churn rates

Costs

4. Improve Customer Service Deploy channels & products customers demand, tailor interactions to individual needs, solve issues at initial point of contact, single customer view

Four Key Business Challenges in the TCM Space Transparency:

Consolidation:

•Better Cash Forecasting tools •Improved Risk Management with cross asset view •Ability to monitor limits to better manage risk & exposure and prevent fraud •Automation and STP

•Remove spreadsheets •Silo architecture •Increased flexibility and integration with other systems

Risk and Control

Single Platform Keeping up with Business demands – Front to Back Office and with Regulators

Flexible Technology:

Better Technology

•Technology as an enabler •High volume processing •Easy integration

Reducing Costs Throughout

Customer Focus

Customer Service as a Differentiator:

•New business offerings •Broader instrument coverage • Better performance and usability •Quicker time to market •Customer Self Service

Key to Solving Business Challenges is the Treasury Treasury has become an integral part of the Senior Management Team In addition to funding, managing cash and liquidity; the Treasury is becoming involved in high level strategic initiatives such as: • contributing to corporate financial management decisions

• overseeing enterprise wide treasury operations

Treasurers are key to continued growth

High Level Strategic Initiatives

• instituting risk management and compliance measures

Proposed Solution Architecture for Treasury

Non-treasury FX flows

Trading Platforms

Real-time Market Data

Dealing 3000 (FX/MM) Bloomberg (FI)

Reuters / Bloomberg

Positions OR Deals

Front-to-Back Office Treasury System Trade Capture (Cross asset) Opics Risk Plus LimitsManagement Management(VaR, Simulation) Risk Position Keeping Confirmations Opics Plus Back Office module Payments / Settlement Trade Processing – Confirmation, Accounting Accounting Settlement,

S.W.I.F.T

Accounting entries

Customer static data / Nostro Acc / SSIs

Dr/Cr Nostro positions

General Ledger

Core Banking Solutions

Compliance Module

Risk Module

Real Time Monitoring, Control, Compliance and Governance Platform

Scenarios, Sensitivities, Value at Risk, Benchmarking, Portfolio Attribution

Broad Asset Class And Functional Coverage Treasury Solution Map Asset Class

• • • • • • • • • • • •

Bond Derivatives Commodity Derivatives Credit Derivatives Equities Equity Derivatives Fixed Income Foreign Exchange FX Derivatives Interest Rate Derivatives Money Market & Discount Papers Precious Metals Islamic Treasury

experience, solutions, results

Functionality

• • • • • • • • • • • • • • • • • •

Accounting Cash Management Collateral Management Compliance Confirmations Custody Deal Capture Investigations Limit Management Matching Netting Portfolio Management Position Management Pricing Reporting Risk Analysis Settlements Structuring

Interfaces

• • • • • • • • • • •

Bloomberg Market Data Reuters Market Data Generic Market Data APIs Bloomberg Trades Reuters Dealing EBS Fenics Traiana Generic Trade APIs CLS SWIFT

10

Opics Plus Risk Module

• Real time Position updates covering all capital markets, derivatives and treasury modules • Full range of Value at Risk methodologies and Back testing

• Extensive stress testing and sensitivity analysis • Portfolio benchmarking and performance analysis • Risk reporting integrated with front and back office information for complete risk transparency 11

Opics Plus Middle Office Suite Provides “Environment of Protection” Current & Future Function • Integrated Risk Solution • Real-time VaR • Stress Testing • Attribution • Scenario Analysis • Hedging/Optimization • Back testing • Benchmarking • User-defined limits

• Central valuation engine for Opics Plus • Browser based “Apps” (Blackberry, etc.)

Value at Risk

Sensitivities

Scenarios

Liquidity

• Marginal VaR Environment of Protection

• Limit/Case management • New Credit methodologies (Credit Simulation, CreditMetrics, etc.) • Collateral Management

• Real-time notification/ PreDeal checking

Allows for a centralised, high level dashboard view of a all risks across the institution.

Market Rates

Positions

Workflow

Settlement

Back Office Transaction Processing

Deal entry

positions

Add instructions

Deal verification nostro

confirmations

confirmations Authorize instructions

Accounting experience, solutions, results

confirmations

payments

Opics Plus: Back Office Streamlines Operations • Flexible multi-currency, multi-entity accounting structure • Integrated Hedge Accounting module • Consolidated back office blotter for transaction processing • Full STP availability and user-definable exception management • SWIFT, automatic confirmation matching • Open database, customized reporting

Opics Plus v3.0 Benefits Overview New Technology Framework cost saving avenues, •Improved customization •Integration •Performance

Maximize gains from your investment

Consolidation through:•Front to Back •Across Asset Classes •Hubs Scalable, benchmarked high performance enabling architecture increases processing while reducing operating costs

More products and types available in Opics Plus catering to current markets and needs

Enhanced functionalities leading to better STP and ultimately reducing risk

New Front Office featuring re-engineered blotters for greater performance and new services enhance trader capabilities Middle Office Suite measures risks, delivers new pre-deal checking capabilities and allows for adherance to compliancy

Opics Plus: Robust Treasury Components Available Across Channels Trading Desk – Faster, Flexible Data Delivery

Customizable trader desktop

Single Consolidated Deal Capture

Pre-deal position & counterparty credit checks

Real-time position, P&L & desk level risk stats

Real-time: market data Feeds & deal interfaces & advanced pricing

What-if deal & scenario analysis, limits & exception monitoring

Sales Desk – Web Portal Immediate Customer Information White labelled client web access

Automated customer mark ups, configurable spread matrix

Segregation of Sales Desk position and P&L

Easy access to customer account information

Automatic pricing to web customers, integrated web access reduces phone orders

News, blogs, corporate videos or market headlines Links to web clients

Middle Office – Environment of Protection VaR: Parametric, Monte Carlo and Historical Simulation

Hedging, Optimization, Portfolio Management, Backtesting, Benchmarking

User defined rules and limits monitoring

Flexible and sophisticated notification features

Single, integrated solution

Centralised, dashboard view of a all risks across the institution

Back Office – Streamlines Operations Flexible, multi-currency, Multi-entity accounting

Integrated Hedge Accounting

Consolidated Back Office blotter for transaction processing

Full STP availability, user defined Exception mangement

SWIFT, automated confirmation matching

Open database & customize reporting

Opics Plus: Supporting Trader Activities Across Trading Desk To Win More Business Fast pricing and risk calculations, ability to cope with rising volumes and growing complexity of financial instruments.

Advanced Pricing Capabilities:

Customizable trader desktop

Single consolidated deal capture

Pre-deal position & counterparty credit checks

Real-time position, P&L & desk level risk stats

Multi asset class instrument coverage

Advanced pricing capabilities

Real-time market data feeds & deal interfaces

What If deal & scenario analysis, limits & exception monitoring

Deal Interfaces:

Opics Plus: Software as a Service (SaaS) Treasury via SaaS Provides access to Opics Plus remotely and can include: • hosting technical infrastructure • Web access • 24x7x365 monitoring & support • Disaster Recovery

Benefits • Quicker speed to market • Lower IT infrastructure • Operational risk • Accessible anytime, anywhere

SAS 70 Type II Compliant Processes, procedures and controls formally evaluated and tested by an independent accounting and auditing firm • controls related to logical access to systems, programs and data • change management; processing controls • environmental controls and physical security.

Opics Plus: Islamic Treasury Support Instruments Included:

International Commodity Murabaha Reverse Murabaha Wakala (Deposit) Deposit Exchange Tawarruq Sukuk FX Spot Restricted & Unrestricted Full Front to Back Processing Out of the Box

Opics Plus: Speaks To Current Business Challenges Need: Consolidation • Fully integrated Front to Back Office • Broadened asset class coverage • Easy integration into business operations

Need: Flexible Technology • • •

Highly scalable, benchmarked, high volume processing Flexible, n-tiered architecture Streamlined, automated workflow management by exception

Need: Transparency

Opics Plus Delivers

• • • •

Extensive Risk & Compliance capabilities Support for new regulatory standards Cash Forecasting Operational efficiencies

Need: Better Servicing of Clients • New business line offerings • Better performance, usability, capacity • Front Office broader instrument coverage • Quicker time to market via rapid deployment models

Opics Plus: Enabling Technology, Unsurpassed STP, Treasury and Back Office Capabilities Fully integrated Core Treasury, Capital Markets and Derivatives solution that processes transactions from deal capture, through to settlements and accounting. Award Winning for Innovation: • Designed on a single .NET, Service Oriented Architecture platform • Provides flexible customization for business re-engineering and fine tuning • Ensures high levels of Microsoft endorsed and client benchmarked scalability

Delivering Breadth and Depth: 1. Increased STP for current and future needs 2. Consolidation and automation across Operations, streamlining while decreasing risk exposures and costs 3. Enhanced transparency through risk management, compliance and cash forecasting tools 4. Proven heritage of over 17 years of robust treasury functionality Many of the worlds largest financial institutions are using Opics Plus to simplify their Core Treasury needs

Opics Plus Is Built on 19+ Years Of Experience

2012 & Beyond Innovating for the Future

2006 Award Winning Solution

1993 Building a Strong Foundation • Opics enters the market as a Treasury Back Office solution developed on Visual Basic • First User Conference held in 1993 initiating the growth of valuable client partnerships

• Opics Plus Middle Office Suite introduced offering an “Environment of Protection” to our clients

Achieving Market Reputation • Winner of the Windows in • Front and Middle Office Financial Services fully integrated with Back “Innovator Award” for reOffice engineering project.

• Opics Plus v3.0 development completed delivering a fully .NET platform

• Additional asset class coverage developed for Derivatives and Capital Markets

• Client and Industry Partnerships expansion extends product offering and reach

• Opics Plus introduced in 2005 as the new n-tier, .NET, Smart Client release of Opics with design validation by Microsoft.

• Product footprint continues to grow along with client investment: 190+ clients in 280+ sites globally

Misys Portal for Opics Plus [email protected]

Slide 23

©MISYS 2012

Growth of Online Portals In the Foreign Exchange and Money Market Space Need for online portals has grown significantly

Electronic trading is rising

Banks need to respond with a strategy

Online portals are now a “must have” for bank to corporate business.

Banks must deliver new products and services to market quickly, while maintaining internal costs and increasing efficiencies.

Delivery of a first class online portal solution for bank corporate customers is required. Solution must be tailored to meet the bank’s needs while underpinned by a unified and flexible technology enabling speed of execution.

Misys Portals Developed In Response To Current Market Trends

Misys Portal answers the request for a front-end for Bank„s corporate customers

Banks are looking for integrated solutions. Misys provides unique front to back cross product integration

Strategic positioning: core in Misys strategy, proven corporate portal, best technology guarantees future evolution

Misys Solutions for Online Banking A common portal technology platform for services across the bank

Misys Portal for Opics Plus Misys Mobile Personal Finance Portal

Loan Portal

Trading Portal

Asset Servicing Portal

Trade Portal

Cash Portal

Misys Portal Banking Services

Retail Banking

Commercial Lending

Treasury & Capital Markets

Trade Services

Corporate Cash Management

Misys Portal for Opics Plus: Overview Web-based, customer facing solution designed to address the e-banking needs of a bank’s corporate customers and their retail branches. Combines the experience of the Misys Portal team in deploying market-leading internet based solutions and the Opics Plus team in providing robust treasury and capital markets functionality.

Delivered via a modern e-banking application integrated with Opics Plus.

The solution is designed to reduce Total Cost of Ownership (TCO) while improving usability and overall customer service.

Misys Portal for Opics Plus: Key Features Key Features: • White Labeling capability • Multi-Language • Self Service administration tools

• Reporting and Inquiry tools • Bank Published RSS Feeds • Alerts for Key Dates and Events • Support for Firefox, Internet Explorer and Safari browsers Misys Portal for Opics Plus: Access to news feeds, recent activity, current exchange rates, product menu and calendar milestones.

• Supports Multi-Factor Authentication with Tokens • On-Line Help

• Single Sign-On

Misys Portal for Opics Plus: Key Features

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Immediate Access to Customer Information Across Sales / Trading Desk Slice and dice customer positions, P&L, account balances and transactional activity in real-time. Core Opics Plus functionality

• Automated customer markups • Configurable spread matrix • Segregation of sales desk position and P&L • Easy access to customer account information • Integrated web access reduces phone orders • Switch between automatic and manual pricing • Account transfers with embedded FX transaction

Kondor Treasury Management System

Slide 31

©MISYS 2012

Manual Pricing Are you able to pricing analysis for complex deals? Can you simulate deals in your portfolio?

TODAY

Manual Capture

Backoffice Processing Your payment are processed manually and reconcilation takes a long time.

Manual

You send deals manually to your excel spreadsheets, core banking systems in multiple ways. You are writing manual tickets You manage your credit and market limits manually on spreadsheets

Current Scene

Reporting Your reports are based on Excel outputs.

MTM Your Portfolio You are managing your positions and MTM on Excel without realtime market updates.

32

Pre-Deal Analysis

Proposed

Price Your Deals Using Sophisticated Financial Libraries Create Your Product Structures Test and Simulate Your Products

Auto Deal Capture Backoffice Processing

Automated Kondor F2B Suite

Create a Fully Automated Backoffice Process From Deal Validation to Payments/Accounting/ Recon

Reporting Slice & Dice Your Reports Retrieve Criteria Based Detailed Reports Automate Reporting Tasks

Deal Capture from Dealing 3000, Websites, 3rd Party Systems. Generation of Tickets Realtime Monitoring of Credit/Market Limits

Realtime Positions Split-Second Positions for FX/MM, Sec, Cash, Deriv MTM/P&L Calcs Risk/Rewards/Exposures Updates

33

Structured Products

Foreign Exchange

Money Market

Product Design

Securities (EQ, FI)

Pricing

ComDerivatives modities

Inflation

Deal Capture

Reporting – Workflows – DealFlow – P/L Explain, Deal Versioning Real Time Positions

Risk Analysis

Simulation

Revaluation

ALM- Trading & Banking Book View

Kondor Back Office

MISYS Global Risk

IFRS Standards

Basel-II/III Compliant

Counterparty Limits Settlement Limits

Reconciliation

Market Data Reference Data Trade Details

Accounting

Settlement

Static Data Market VaR Credit VaR PFE

Custom Data

Confirmation

API Export

Import

Validation

Kondor+ Instruments Coverage Treasury

Cash Instruments

Securities

Spot Deals

Bonds

MBS ABS

Equities Loan /Depos

FX Swaps

Papers & Cds

Repos & Sec. Lending

Warrants

Islamic Trsry

Commodities

Futures

Derivatives

Outright FX

Bond Options Credit Derivatives

Future Options Index/ Equity Options Equity Swaps

FRAs

FX OTC Options

IRS/CIRS

Swaptions

Caps / Floors

Ccy Futures

Compound Products : combination of Kondor + instruments Kondor+ Structured Products : Pricing with Numerix and External libraries

Kondor Global Risk- Credit Limits •

•

Credit Limits 

Standard Credit Limits



Concentration Cap Credit Limits



Black Hole Credit Limits



Allocation Transfer



Limit Hierarchies (Group/ Composite/Facility Limits)

Settlement Limits



Standard Settlement Limits



Liquidity Limits



Black Hole Settlement Limits

36

Kondor+ Market Limit System (MLS) Limits coverage: 

Position Limits



Transaction Limits (maximum deal amount)



Stop Loss Limits



Sensitivity Limits



Covering all asset main classes in Kondor



With a Complete Excess Workflow Management including more than 15 Standard Reports



With a Flexible Limit Set up supporting different calculation methodologies

Introduction

37

Kondor+ Back Office Functional Scope  Multi-currency, multi-entity, multi asset  Configurable workflow processing from deal entry to settlement  Validation  Deals, Events, Payments, Deliveries, Messages, Accounting  Fixing Process & Maturity Process  Messages Module (Confirmations, Swift, etc.)  Payments & Deliveries Module, SSI  Cash Management (Balances, Global Netting, Reconciliation etc.)  Accounting Module (Local & International Standards)  Balances, Reports, End of Year Process  Revaluation Process (Mark to Market, Accrued, etc.)  IFRS Coverage, Effectiveness Tests  Operations Monitoring Dashboard (Events & Exceptions)  Reporting/Compliance  Connectivity (Swift Gateway, General Ledger, Settlement & Clearing Systems etc.) Solution Overview

Kondor+ Insight • FOR WHO? – Traders – Risk Managers – Heads of Desks

• ADDED VALUE – Source all Data in one single screen (internal and external) – Build new value propositions (e.g. P&L Predict) – Improve demo impact in competitive pre-sales bids • COMMERCIALS – Advanced Reporting pre-requisite – Licensing: per User profile (Designer, Trader)

39

Kondor+ Insight Architecture overview

Misys Kondor+ Suite – An Overview A true Cross asset, F2B, Treasury platform with global trading capabilities

Flexibility to adapt to Multi-entity, Multi-site environment

Real-time P&L, Positions and Limits management

Comprehensive Risk management requirements

Comprehensive monitoring, analysis and reporting tools

Bank specific requirements through custom configuration

Configurable workflow processing from deal entry to accounting

An effective compliance tool to comply with internal / external controls 41

Real time Control, Monitoring and Compliance Module

• • • • • • •

Suspicious Activity Monitoring/Business Activity Monitoring Market Risk Limits Credit Risk Limits Portfolio Risk Monitoring Liquidity Risk Monitoring Governance and Compliance Collateral Monitoring and Management

Dashboards for Management by Exception

Alerts requiring Acknowledgement

Instant Notification experience, solutions, results

Overview of Project Drivers (TBC) Functional Requirements •

Cross asset, F2B coverage

Business Challenges •

A single integrated platform to support Global Treasury

•

Multi-entity / multi-book structure

•

Faster time to market to introduce new and innovative products to customers

•

Global view of positions / risk / P&L

•

Scalability of the solution to support future growth requirements

•

Compliance with internal audit as external regulatory requirements

•

Reduce process inefficiencies through trade life cycle automation

•

An open system seamlessly integrating with the bank’s existing IT infrastructure as well as external platforms

− FX, MM, FI, Repos, Derivatives, Structures − Equities, Commodities •

•

•

Consolidation of positions Pricing, Pre-trade analytics, Position management Limits Management − Credit / Market risk limits

•

Monitoring / Internal controls / Alert monitoring − Tolerance checks

•

•

Risk Management − Sensitivities, Simulation, Scenario analysis, VaR Trade Processing − STP, Configurable workflow − Confirmation generation − Payment, Settlement, Accounting − Nostro and cash management

43

•

Standardized processes

Common implementation challenges

How can I leverage Misys’s experience in implementing solutions?

What is the best implementation methodology?

How quickly can we go to production?

How can I control my project risks and costs?

Does the team have sufficient technical and project management skills?

Misys Model Bank approach coupled with Rapid Implementation Methodology provides an answer to all the above questions experience, solutions, results

Bank’s Expectations • Quick implementation - Go Live with the core functionality to address the main pain points as quickly as possible • Model Bank workflows - Access to the market standard “best practices” workflows • Scalability

- Scale up to meet the future requirements

• Pre-configured Data

- No need to start from scratch

• Standard documentation

- Standard configuration documents, templates, test cases…

• Learning Material - Online / Audio-visual training tools • Straight through Processing – Reduced Operational Risk

Misys Model Bank – What Do We Deliver • Unique blend of – Rapid pre-packaged delivery of core treasury business requirements – Subsequent and phased roll out of the client defined business requirements • Global and Regional Best Market Practices – “Model Workflows” for each instrument • Pre configured static data – Core - This will be delivered as pre-defined, pre-configured – Non-core - Built off-site using standard static data templates provided by Misys • Complete Model Configuration documentation of each pre-configured instrument • Complete List of Pre-configured reports / Inquiries • Online / Audio Visual training material through Misys Learning Suite

Misys Model Bank Value Proposition Adoption of best market practices Rapid delivery of core functionality (3-4 months time) Minimal involvement of bank’s internal resources Improved Operational efficiencies through the ability to trade, manage risk and settle treasury instruments within a single integrated, front-to-back office platform

Quick and guaranteed ROI

Benefits to Customer

• A fast 3 months implementation (quick return on investment) • Model Bank workflows, access to the market standard “best practices” workflows • Fully documented system meeting Bank PMO requirements. • Consistent delivery approach ensuring project success as well as control of project costs and risk. • Lightens Bank resource requirements and vendor expenses. • Scale up quickly, gives room to grow beyond vanilla treasury instruments • Out of the box, locked down system with pre configured static data • Pre-delivery testing with Misys prepared test cases ensures clean UAT testing on-site

experience, solutions, results

48

Opics Plus Model Bank Rapid Implementation Methodology • A well-structured, rapid and proven implementation methodology

Live Roll-Out

Reduced time to market Using our proven and rapid project methodology plan

Implement

Accelerated implementation process using our market experienced business and technical consultants

Build

Design

•

Pre-Built Solution Using standard practices together with your specific business requirements Standardised package implementation with pre-defined business standards and processes

A market ready, rapid deployment solution

experience, solutions, results

49

Questions?

50