Clearing and collateral architecture

The applications architectures implemented in most firms have evolved historically within divisions and silos from local business drivers. The new clearing and collateral regulations are forcing large scale change on legacy architectures, often highlighting massive duplication. Single business functions implemented in many different systems require multiple change projects to implement one change, at a cost that is no longer affordable. The advent of prospective volume increases from mandatory clearing and collateralisation of non-cleared OTC, combined with relentless downward pressure on operating costs, are forcing firms to consider radical transformation of their systems architectures.

Our architecture design approach spans:

• Creation of a logical functional model covering the business in scope – such as cleared and non-cleared; OTC, ETD and cash, client and house – independent of silo, geography and product
• Capturing business and technology imperatives and principles that the target architecture must implement, such as EMIR / BCBS IOSCO compliance, customer self-service, accelerated innovation, collateral flow volumes, STP operation etc
• Mapping current state systems infrastructure to business functions to identify duplication and simplification opportunities, such as margining, liquidity and collateral management, cross-silo customer engagement etc
• Establishing a “conceptual architecture” aligned with key business characteristics, such as OTC vs cash products, physical vs cash settlement, product-specific risk modelling etc
• “Fating” the estate to facilitate decision making on buy/build/hold prioritisation, driving out one or more target “logical architectures”
• Mapping run-costs and change-costs to business functional to highlight current state cost duplication; modelling future state architecture costs to establish the business case for change
• Facilitating architecture provisioning decisions to drive out the target “physical architecture”, which may involve evaluation of internal componentry and external service candidates such as collateral utilities from TriOptima, AcadiaSoft, Margin Transit Utility etc
• Designing detailed technical architecture (boxes-and-wires), adopting and adapting industry standards such as TOGAF
• Roadmapping the implementation journey options
• Confirming the business case

TFE accelerates design of the clearing and collateral architecture, reducing project time, effort and risk, through our business knowledge of clearing and collateral combined with our expertise in conceptual / logical / physical / technical architecture design.