• About
    • Our Team
    • Client Testimonials
    • Current Vacancies
  • Clearing, Collateral & Sec Finance
    • Securities Finance
    • Clearing & Collateral Strategy
    • Operating model & solution selection
    • C&C Technical Architecture
    • Implementation
  • Consultancy Services
    • Business strategy
    • Business operating model
    • RFR Transition – (L)IBOR migration
    • Brexit and Securities Finance
    • Implementation
    • Roadmapping
  • TFE-Modus
    • Methods
    • Tools
  • Case studies
  • News
  • Whitepapers
  • Careers
  • Contact
Menu
  • News
  • Whitepapers
  • Careers
  • Contact

The Field Effect

  • About
    • Our Team
    • Client Testimonials
    • Current Vacancies
  • Clearing, Collateral & Sec Finance
    • Securities Finance
    • Clearing & Collateral Strategy
    • Operating model & solution selection
    • C&C Technical Architecture
    • Implementation
  • Consultancy Services
    • Business strategy
    • Business operating model
    • RFR Transition – (L)IBOR migration
    • Brexit and Securities Finance
    • Implementation
    • Roadmapping
  • TFE-Modus
    • Methods
    • Tools
  • Case studies
Search posts
Archives
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • January 2017
  • July 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • October 2015
  • September 2015
Home  >  News  >  Brexit operating model and roadmap design
Julian Eyre | published on 18th May 2018

Brexit operating model and roadmap design

It is obvious that firms need a footprint within EU27 to continue servicing European clients, even though the full implications for the loss of financial services passporting are not yet clear.  Headlines have flown past us like straws in the wind: “Thompson Reuters moves FX derivatives to Dublin…”; “Goldman trebles Swedish office…”; “Citigroup boosts operations in Dublin, Frankfurt…”; “Mitsubishi eyes Amsterdam as post-Brexit EU base…”.

An important question is how material these legal entities need to be, and how they will operate in practice.  A “materiality” test is likely to conclude that sales and trading, along with senior management and capital, must be present and regulated in the EU27.  But it will be prohibitively expensive for most firms to re-locate risk management and complex post-trade infrastructure.

An emerging approach is the “ServeCo” model.  This is already popular with ring-fenced banks, who have created a central bankruptcy-remote legal entity that serves both the IB and retail bank for operations & finance functions.  Regulators seem to be accepting that ServeCo could service retail, UK IB and EU27 from a single arms-length legal entity.

The detail is important.  It also looks possible that EU27 entities may be allowed to back-to-back non-euro trades to UK IB for risk management, though it seems very likely euro denominated trades will have to be risk managed and funded within the EU27 entity, even if ops & finance are outsourced to ServeCo.

The implementation considerations are numerous:

  • Re-papering of customers and counterparts
  • Establishing book structures for non-euro trading at both ends of the back-to-back trade
  • Setting up trading & risk mgt within EU27 entity ready to start trading Mar 2019
  • SLAs with ServeCo and between entities for back to back trading & risk
  • Consolidation of risk & finance reporting
  • Hiring the people into EU27 entity
  • Connectivity to market infrastructure (exchanges, settlement venues, triparty agents, CCPs, iCSDs, ARMs, CCPs, matching utilities… etc)
  • Creating new funding capability & relationships
  • Collateral management & optimisation

Scary thought… many firms have not yet designed the operating model in the target state, let alone planned a detailed implementation roadmap.  Firms may hope for an extended transition period, but they must plan for the possibility that it will be withdrawn at the last minute – so they have to be ready by Feb 2019.

The Field Effect team are experts at quickly designing complex banking target operating models and roadmaps, and we can also help you implement through our agile delivery approach.  Call us for a chat about Brexit.


Posted by Julian Eyre

Related posts

Delta Capita buys securities finance consultancy The Field Effect

Find out more

The Field Effect SFTR services update December 2018

Find out more

SFTR – Call to action

Find out more

The Field Effect

  • About
    • Business expertise
    • Technology insight
    • Delivery methods and tools
    • Meet the team
  • Clearing, Collateral & Sec Finance
    • Clearing & Collateral Strategy
    • Operating model & solution selection
    • C&C Technical Architecture
    • Implementation
  • Delivery methods
    • Business strategy
    • Business operating model
    • Roadmapping
    • Implementation
  • TFE-Modus
  • Case studies
  • Careers
  • Whitepapers
  • News
  • Privacy Policy
© The Field Effect 2015 | Privacy | Designed by Eight Arms