Trading and Treasury

Trading and Treasury

WEPEX cover the full range of derivatives of all asset classes, including exotic variants as well as all spot market products (stocks, bonds, FX/MM and securities lending and borrowing/repo). WEPEX has experience in the entire process chain from sales/brokerage and trading to trading support processes, risk management, P&L reporting, accounting, controlling and settlement of OTC, and exchange-traded derivatives.

In addition, WEPEX is very familiar with the functionalities and application areas of marketable trading software such as Front Arena, Murex, Sophis Risque, Calypso, Kondor+, Summit, or Imagine.

Selected projects that we have carried out in this environment are listed below:

Derivatives Trading
  • International investment bank: Program management for Front Office and Risk Management IT in the area of complex derivatives, steering several projects, planning and prioritizing measures, building up the team, and reengineering the architecture.
  • International investment bank: Project management and conception for the introduction of complex equity and interest rate derivatives, coordination of process and system expansions for risk controlling, reporting and accounting, planning and control of the integration test
  • Landesbank (regional state bank): Cross-divisional coordination for the introduction of credit, equity and commodity derivatives, planning and prioritization of process and system expansions in trading systems and downstream applications (risk controlling, reporting and accounting)
  • Landesbank (regional state bank): Project management for basic migration, testing and rollout of a complex release upgrade of the central trading system for equities and OTC derivatives with integration into the entire process chain and all banking functions.
  • Top Institute of the Sparkassenfinanzgruppe: Project management of basic migration, test and rollout management in the context of the release upgrade of the central trading and risk system for interest rate, credit and equity derivatives, including test procedure and development of the technical platform for the preliminary test of the valuation connection.
Trading Cash Market
  • International Commercial Bank: Project management, planning and implementation of post-merger integration for the FX/MM business, standardization of product catalog and master data, system consolidation, and data migration
  • Top Institute Sparkassen-Finanzgruppe: Analysis of processes focusing on mass business capability, design and implementation of business enhancement for equity and bond transactions in ETF trading
Certificate Trading
  • International investment bank: Definition of processes and architecture for certificate trading (issuing process, pricing, market making, trading, product lifecycle management)
  • Major European bank: Migration of certificate trading to a common global platform, process analysis, definition of target processes taking into account specific local requirements, definition of system expansions and interfaces, piloting and data migration
  • International commercial bank: Project management, IT performance enhancements, load increases and production stabilizations to enable high-volume retail certificate business with secondary market and market-making.
  • Landesbank: Project management and senior advisory services in the development of a business model for the issuance of retail certificates, planning and prioritization of measures, building up the team, reengineering the trading architecture, and introducing new products along the entire process chain and bank functions.
  • Central Institution of the Sparkassen-Finanzgruppe: Project management in the development of an issuing platform for retail certificates
Securities Lending/Repo
  • Public-sector bank: System introduction of securities loans/repo with the support of fund pooling and agency lending, integration of various tri-party agents, increase in the degree of automation for rapidly growing trading volumes, requirements analysis, planning, specialist conceptual design of master data extensions and internal and external interfaces.
Sales und Brokerage
  • Direct bank: Preliminary study on the connection of trading platforms for the off-exchange trading of certificates and warrants, selection of suitable platforms, compilation of a catalogue of requirements, analysis of the effects on processes and technology as well as implementation-planning.
Risk management
  • Major European bank: Introduction of a risk management system for equity derivatives trading, project management, analysis of requirements, conception and development of the architecture for scenario calculations, interactive reporting for traders, management and risk controlling
  • Landesbank (regional state bank): Replacement of a proprietary market risk system by the market risk component of standard software, project management, test planning and execution
Assessment Architecture
  • Landesbank (regional state bank): Project management, control of the extension of the interest rate evaluation library for CMS, CMS spread TARNs, range accrual TARNs, ratchet and inflation-linked products, control of the validation of the valuation models and procedures and acceptance processes, connection to the trading and risk system, implementation of integration tests.
  • Landesbank (regional state bank): Project management, execution of structured performance analysis for the valuation architecture and connection to trading systems for complex interest rate products, control of the necessary optimization activities derived from the performance analysis.
Support Processes
  • Major German bank: Consolidation of nostro accounts for retail and investment banking, project management, conception of process simplifications in cash management, coordination of adjustment measures, migration planning and implementation, planning and coordination of test activities.
  • Major German bank: Consolidation of customer and instrument master data, technical project management, preparation of service catalogs, analysis of interfaces and processes, definition of target processes, planning and control of migration activities.
Program Management and Architecture
  • International investment and commercial bank: Program management and architectural design for the re-engineering of the international securities finance business
  • Major German bank: Program management for the realization of cost reductions in IT and operations within the scope of restructuring and realignment of investment banking, action planning (e. g. system consolidation, closure of locations, optimization of stock exchange memberships, centralization of processes), and result-reporting to top management.
  • Landesbank (regional state bank): Definition of a target architecture for capital market business in the context of a complex bank merger/integration and preparation of an integration/migration plan
  • Major German bank: Establishment of a program management system for the modernization of core bank processes and systems, support for in-house consulting in setting up a program management system for the further development of the IT and business process architecture for the credit and refinancing business, advising program/project managers on the establishment of governance and committee structures and the use of systems and methods, preparation of a program and project reporting standard, establishment of an IT architecture board.
  • Major German bank: Implementation of new and digital distribution channels for private clients (asset management), management of the program and project office, support of the internal program/project management as an external “right-hand man” of the internal managers
Valuation models & methodology
Complex new regulatory requirements through the recent years force banks, asset managers and other player in the financial markets to re-focus their use of innovative financial products and to enhance their financial engineering and the corresponding valuation modelling. Trading, Collateral Management, Risk Management and Hedge Accounting have to cope with more sophisticated frameworks and environments. Leveraging the strong quantitative background of the highly skilled and experienced senior advisors in the WEPEX advisory board and of specialized partners as well as co-operating with internationally renowned universities, allows WEPEX to enable their clients to use even more sophisticated mathematical models to quantify market and credit risk and optimize risk and return ratios. WEPEX services cover thereby mathematical models to real-time interfaces and tools and regulatory compliance. WEPEX combines business experience and mathematical analysis from traders, structurers, quants and risk managers with the science and methodical and technological best practice.
Selected Project Profile: Restructuring and Realignment Investment Banking Project Background
  • The client is a major German bank with trading locations in investment banking in Frankfurt, London, New York, Tokyo, and Hong Kong.
  • The units are characterized by highly volatile earnings structures and very heterogeneous processes and technologies.
  • The bank strives to reduce the direct and indirect costs of the Corporates & Markets Division by 30% P. A. This corresponds to a reduction of EUR 300 million in annual cost allocation.
  • At the same time, risky business segments should be scaled back or closed completely in order to stabilize earnings.
  • Non-profitable locations should be closed.

WEPEX Tasks and Project Approach

  • Conception and implementation of a program management system for the COO to implement
  • 150 projects and individual measures to achieve annual savings potential of EUR 300 million
  • Total project volume: approx. EUR 21 million
  • Set up a consistent program to implement savings targets with 14 support units
  • Establishment of controlling and reporting to COO and Board of Management
  • Major projects:
  • Closure of two sites
  • Consolidation of securities settlement platforms
  • Consolidation of the front-office application landscape
  • Consolidation of IT production from 4 locations in Frankfurt
  • Extensive reduction of the legal entities in Frankfurt
  • Optimization of exchange memberships, broker networks, warehouse networks and processes for structured products

Findings

  • Achievement of cost targets within 18 months
  • Complete cost transparency of processes, introduction of a cost per ticket service accounting
  • Significant reduction of value at risk/capital costs by reducing proprietary trading activities