December 2018

IBOR Reform: A fundamental change in financial markets

Reference rates like LIBOR, EONIA or EURIBOR are everywhere in the world of finance: They determine loan interests as well as reimbursements from contracts and many more. Financial products in the range of EUR 150 trillion are indexed by such reference rates. But their days are numbered; with the scandal on LIBOR manipulations the regulatory authorities have started setting new standards that go far beyond the present setup of most common reference rates. In 2020 latest things will change.

Read more ...

July 2016

Outsourcing - thinking end-to-end

Banks have been using new ways of sourcing standardised activities in order to reduce costs. When it comes to IT projects, there are severe impacts that are often not considered when the sourcing decision is made.

Read more (in German) ...

February 2016

Fundamental Review of the Trading Book: Adjustment of trading book formalities

On January 14th, the Basel Committee on Banking Supervision published the final standard of the “Fundamental Review of the Trading Book” (FRTB) and has thereby decided substantial changes in the regulation of the trading book. The revised market risk framework comes into effect on 1 January 2019. The features of the new framework present a considerable challenge for banks including a revised boundary between the trading and banking book, a revised standardized approach and the expected shortfalls as a new risk measure for market risk.



Distributed Ledger Technology in Finance - from Inception to Reality

Bitcoins were only the beginning – other settlement systems beyond the world of central banks are waiting to shake the financial industry to its foundations – read more in Firstwaters’ new white paper “Distributed Ledger Technology in Finance - from Inception to Reality”


April 2015

Quo vadis, Clearing Market?
The market for clearing services at a turning point

Clearing requiring market participants who have not already linked to a central counterparty (CCP) will increasingly encounter difficulties to get the access via a clearing service at acceptable terms. The price of the clearing for the economy is very high due to high operational and regulatory costs. New solutions scrutinize the traditional market sharing and strengthen the value added of IT vendors.


May 2014

"… and accidentally boosted sales"

Projects targeted at improving processes in corporate loan business induce an accidental yet highly welcome side effect: Sales figures tend to rise, new credit contract figures increase by 25 to 30 percent. The reasons behind are laid out in our new (German language) white paper on process optimisation in credit business.


April 2014

"Die gut genutzte Bilanz" – How to make asset encumbrance reporting an asset of its own

Clearing, margining, collateralising bilateral business – a good part of a bank's liquid assets is designated for such purposes these days. To avoid risks for the other creditors, the EU has required that banks disclose the encumbrance of their assets. What banks need to know to make this reporting a valuable asset can be found in our latest white paper.



"Yes, My Account Is an Island"

The European Market Infrastructure Regulation (EMIR) requires that straightforward ("plain vanilla") over-the-counter (OTC) derivatives have to be cleared through central counterparties. London based LCH.Clearnet is market leader for clearing interest rate derivatives.

While most international major players are direct clearing members with LCH, smaller and more specialised banks tend to prefer indirect clearing. They buy clearing services from the direct clearing members. All collateral used for the margin calls are booked to the client accounts of the respective direct clearing member.

EMIR requires that clearing houses offer segregated accounts for each indirect clearing client. This means, LCH have to enhance their services, because they have only offered to handle client collateral via Omnibus Accounts.

In their current white paper "Yes, my Account Is an Island" the consultants of Firstwaters present the changes banks are facing with the new model of segregated accounts. Firstwaters' capital market specialists name the risks and tell what banks need to do right now to benefit from the advantages that come along with the new accounting model.


February 2014

All Eyes on Brussels
Die MiFID-Novellierung und der OTC-Derivatehandel

The beginning of 2017 will likely mark the start date for the supervisory regulation package of MiFID II / MiFIR. Platform trading will be standard procedure for OTC derivatives which brings along substantial challenges for the involved banks. 2014 will be the year to analyse the legal requirements and to start the technical and organisational implementations which will be a demanding task.

Read more ...

December 2013

The Winner Takes It All?
How Banks will cope with Regulation on OTC derivatives

The 2013 Firstwaters survey among Europe’s leading banks shows that the ongoing regulation of the OTC derivatives market (triggered by EMIR and Dodd-Frank) will probably lead to a further standardisation of the business. The division between US and European markets will likely increase, and customers are expected to rush to the big players. The top-tier banks will be best suited to meet the expected effects of cost pressure and shrinking margins. They will benefit from the regulatory challenge and most likely win market shares. For the next years, banks expect a consolidation in the overall market with simpler products and a continuing pressure on pricing and transparency.

Read more ...