Synthetic Finance

Client context

Like all custodians without Securities Settlement System (SSS) status, this $1tn AUC custodian faces the loss of custody fee revenue when customer assets pledged as CCP collateral move into venues such as the iCSDs to meet EMIR 47.3 requirements. They needed a strategy to retain control of customer assets through iCSD partnership, and a collateral services proposition to meet customer requirements for margin management.

Project scope

  • Collateral strategy: our consultants facilitated creation of vision, objectives and goals for the initiative, and a strategic customer services model which we validated through a series of “voice of customer” interviews. We analysed the firm’s target strategic positioning against peer group competitors, the iCSD partnership model, and developed a high level business case and implementation roadmap, and supported the buy-in of senior stakeholders to the vision.
  • Collateral target operating model: we developed target functional and process models for delivering the customer services, incorporating iCSD highway and hub capabilities, analysed in detail three competing technology architectures and facilitated the technology decision.
  • Collateral business case and roadmap: we developed and estimated a phased multi-year delivery roadmap, supported by detailed business benefits analysis across custody and sub-custody network.

Benefits

The client was able to accelerate strategic decisions based on access to wide clearing and collateral industry knowledge, and develop consensus across multiple stakeholder groups that unlocked strategic programme funding.


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