Buy-side firms are unprepared for new trading mechanisms, costs and increased complexity and should partner with established providers to adapt to an evolved OTC derivatives marketplace, according to research commissioned by State Street.
The new research paper, “From Readiness to Revolution: The Implementation and Impact of Derivatives Clearing Regulatory Reform,” provides insight into preparations for swap execution facilities (SEFs), central clearing, collateral management and reporting.
State Street, which operates as a futures clearing merchant (FCM) and a SEF, commissioned the research with Aite group which surveyed buy-side firms that collectively represent more than USD6trn in assets under management. The research highlights developments across the entire trade life-cycle and includes a roadmap to readiness for Category III firms - those firms that have yet to complete the Commodity Futures Trading Commission’s (CFTC) phased implementation of derivatives clearing.
“The days of the excel spreadsheet are gone, collateral management has moved to the front office and phones have been traded in for exchanges,” says Jeff Conway, executive vice president and head of State Street Global Exchange.
Global Exchange brings together existing components from State Street’s research and advisory, analytics, Currenex, Global Link and derivatives clearing capabilities to address clients’ data information and trading challenges.
“As the trend towards electronification continues, regulatory reform demands strong technology. We are well positioned to provide the buy-side with solutions to these challenges across the entire trade cycle, from execution to clearing to collateral.”