Woodbine Associates , the capital markets consulting firm (http://www.woodbineassociates.com), announces the release of its latest report, “OTC Derivatives Readiness Guide: Business and Regulatory Requirements for Asset Managers and Other End Users Under Title VII,” which comprehensively examines the business and regulatory requirements for asset managers, hedge funds, and other end users in the newly regulated OTC derivative markets.
The report details key business, operational and technology requirements firms face under the new legislation and provides a clear, concise framework to assess Title VII readiness.
The report is a “soup-to-nuts” guide and checklist for firms assess their readiness to meet the Title VII requirements. It addresses key issues confronting senior trading and operations personnel and provides a road map on how to function optimally within the new framework.
“Buy-side firms and derivative end users need to move full speed ahead to ensure they can trade swaps effectively in the new market structure,” says Sean Owens, the report’s author. “The derivative markets are in the process of undergoing a substantial transformation. Firms must meet baseline regulatory requirements as well as a broader set of business essentials to perform optimally in the Title VII world. Management must ensure they have the capability and flexibility to meet the challenges of the evolving environment. Immediate action is essential.”
The report focuses on end user requirements in seven key areas:
• Centrally Cleared Swaps
• Bilateral Non-cleared Swaps
• Execution
• Pre-trade Analysis and Product Selection
• Collateral Management and Post Trade Processing
• Reporting and Record Keeping
• Specific Entity Requirements
Within each of these sections, the report explores key business, documentation, compliance and technology issues. All are critical for establishing business practices necessary in the new regime.
Key Points:
• Firms must take immediate action to ensure they can continue to trade effectively.
• CCP and FCM selection will substantially impact firms’ future capabilities and flexibility.
• Middleware will play an essential role in connectivity, affirmation and confirmation.
• OMS systems and SEF aggregation platforms will play key roles that include consolidating risk measurement, venue connectivity and displayed liquidity.
• Pre-trade analysis of product, margin and venue, and post-trade collateral management, will significantly impact the economics of transactions and the products used to transfer risk.
• Internal compliance, position monitoring and risk management responsibilities will significantly increase for end users.
The 50 page report contains 2 figures and 16 tables.
Sean Owens, the author of this report, is Director of Fixed Income Research and Consulting, and has more than a decade of OTC derivatives trading experience.
