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Review of Risk & Control Processes
Working with a large European agent lender, SIX undertook a complete review of risk and control processes and reporting metrics. This involved reviewing existing capability and making recommendations to upgrade processes and systems to provide underlying clients with the on-going confidence and evidence that the program was being run within a robust risk control environment. Areas of focus included: Daily risk analysis processes and methodology Collateral oversight and analysis Application of a complex credit limit matrix, consisting of several, correlated, …
Where are the issues?
There is an unprecedented level of proposed regulatory change that will impact securities lending currently under consideration. The technicalities of securities lending can mean that the impacts are not always immediatley obvious to the broader firm or compliance officers and it will be easy to miss something important. Potential regulatory changes on the horizon which may impact your business (but not limited to) include: ESMA proposed regulation of short selling & Sovereign CDS Modernisation of the Transparancy Directive FSB review …
Counterparty Risk
With an increasing need for independent and dynamic counterparty analysis, SIX were able to design, implement and proceduralise best practise processes for the on-going management of counterparty risk, leveraging off existing expertise within the firm. This included defining appropriate risk adjusted credit limits with underlying clients and developing a database system that allowed for dynamic management of limits and audit and compliance reporting of them.
Collateral Control Review
With the increased use of multiple collateral managers, it is often difficult for a client to get a complete picture of their collateral positions or analyse the volatility and correlation risks they are undertaking. On behalf of a tier 1 client, SIX were able to work with the collateral managers to analyse controls and ensure client rules were applied appropriately. SIX then developed a reporting tool which enabled the client to monitor compliance with the rules on an on-going basis …
Solvency II for Securities Lending Agents
Understanding how regulatory change may impact your business and having the solutions available to deliver against the requirements is key to managing your business well. Agent Lenders who lend on behalf of insurance fund clients will have to contend with the new Solvency II regulation’s which is being driven by theEuropean Insurance and Occupational Pensions Authority (EIOPA). Like Basel II for banks this is driving insurance companies to supply large quantities of data to the regulator. There are three pillars …
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