The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Quantifi’s Latest Whitepaper Explores the Challenges in Implementing a Counterparty Risk Management Process

Quantifi, a provider of analytics, trading and risk management solutions for the global capital markets, has published a whitepaper entitled ‘Challenges in Implementing a Counterparty Risk Management Process’. The paper explores the key challenges for banks in the implementation of counterparty risk management, focusing on data and technology issues, in the context of current trends and best practices.

In lieu of new regulation requirements, many banks face the challenge of consolidating their central counterparty risk groups or CVA desks across asset classes and business lines. The white paper reviews the primary challenges, which include:

• Gathering transaction and market data from many different trading systems, along with legal agreements and other reference data, causing significant and often underestimated data management issues.

• Difficulty calculating CVA and exposure metrics on an entire portfolio and incorporating all relevant risk factors.

• Expectations from traders and salespeople for near real-time performance of marginal CVA pricing of new transactions.

• Integrating internal counterparty risk management with regulatory processes.

In short, the data, technological, and operational challenges involved in implementing a counterparty risk management process can be overwhelming.

“The OTC markets are going through significant changes due to new regulations and the impending Basel III capital accord,” said David Kelly, director of credit products at Quantifi. “Many of these changes are being driven by counterparty risk concerns, either mandating or creating incentives for central clearing and imposing significantly higher capital charges for bilateral trading. In this new environment, banks are transitioning their business models and shifting decision making authority from the front office to central risk management groups, including CVA desks.”

Related content

WEBINAR

Upcoming Webinar: Developing operational resilience

Date: 25 March 2021 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes Financial institutions’ operational resilience – essentially the ability to prevent, adapt and respond to, and recover and learn from operational disruptions – has come under extreme pressure during the coronavirus pandemic, with last year’s March lockdown creating unprecedented circumstances...

BLOG

New Solutions Emerge to Help Firms Address SRD2 Issues

A surge of new solutions is emerging to help firms meet the data challenges of Shareholder Rights Directive II (SRD2), which came into force on September 3, 2020 despite pleas from the industry for a delay due to Covid-19 pressures. “We ask you to consider, as a matter of urgency, a delay in the implementation...

EVENT

Data Management Summit Virtual

The Data Management Summit Virtual will bring together the global data management community to share lessons learned, best practice guidance and latest innovations to emerge from the recent crisis. Join us online to hear from leading data practitioners and innovators from the UK, US and Europe who will share insights into how they are pushing the boundaries with data to deliver value with flexible but resilient data driven strategies.

GUIDE

Regulatory Data Handbook 2020/2021 – Eighth Edition

This eighth edition of A-Team Group’s Regulatory Data Handbook is a ‘must-have’ for capital markets participants during this period of unprecedented change. Available free of charge, it profiles every regulation that impacts capital markets data management practices giving you: A detailed overview of each regulation with key dates, data and data management implications, links to...