Implementation of financial market regulations for a universal bank

Case Study

Background

In response to the financial market crisis, global regulators introduced a series of new measures to increase stability in the financial sector. With the European Market Infrastructure Regulation (EMIR) and the Dodd-Frank Act, these included the obligation to trade OTC derivatives via central counterparties (CCPs), the reporting of derivatives transactions in particular to central reporting registers and a range of other measures to minimize risk. The new regulations were only introduced gradually and were amended several times, which impaired planning certainty for the affected banks and market players. Our client was a small universal bank in Europe that was affected by the new regulations in several business areas.

Goals

Compliance with the new and complex regulatory requirements should be ensured – care should be taken not to impair existing business activities, to keep the costs of introducing and operating the new regulations as low as possible and to tie up as few internal resources as possible during implementation.

Solution

A project was set up to bundle the analysis, design, implementation, testing and commissioning of the necessary technical, organizational and procedural changes. Appropriate sub-projects were established for each interrelated package of measures, which were responsible for implementation along the regulatory timelines. Regulatory tracking was introduced so that project work could be adapted to the constantly changing requirements and unnecessary additional work during implementation could be avoided. External service providers were evaluated and selected and the corresponding negotiations and connection activities were carried out. Necessary adjustments to banking IT and internal processes were identified and implemented.

Results

Despite the frequent changes to the requirements and the bank’s limited project capacity, all regulatory requirements were met while conserving resources. The bank’s IT and internal processes were successfully adapted and expanded. Central clearing platforms and trade repositories were selected, negotiated and connected. The additional costs in ongoing operations were minimized.

Our role

We took on the role of project management on the client side and successfully coordinated the work of the individual sub-projects. The project management team was the constant point of contact for the relevant specialist departments and the bank’s Management Board. Our deep insight into the front-to-end relationships within the bank enabled rapid analysis and implementation as well as the targeted involvement of internal and external experts and was crucial to the success of the project.