Settlement and Custody

Settlement and Custody

Securities settlement and custody are characterized by high transaction volumes and correspondingly high costs. WEPEX supports its customers with important cost reduction measures. This includes process optimization, sourcing decisions and system migrations as well as optimizing the warehouse network and selecting global custodians. WEPEX’s technical and solution competencies are also available to its customers for critical operational problems, such as the analysis and adjustment of money and betting differences.

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

Securities Settlement
  • Major international bank: Introduction of a new securities middle-office system, analysis of business transactions and optimization of processes in upstream trading systems, adjustment of counterparty master data, and synchronization of the master data of the affected systems
  • Analysis of the strategic options, introduction of a project structure and coordination of the individual workstreams during the introduction of a securities disposition as well as separation of client and proprietary trading portfolios.
  • Landesbank (regional state bank): Definition of the application architecture and restructuring of the sub-project “Migration” within a major project to merge the securities settlement of two Landesbanken and foundation of a joint transaction bank.
  • Public-sector bank: Support of the project management within the framework of a preliminary study for the replacement of the central securities settlement system and evaluation of different alternatives (introduction of new WP system vs. ASP solution at a transaction bank).
  • Cooperative central bank: Post-migration project to eliminate money clearing differences, analysis and structuring of the outstanding post-migration problems after a complex migration project in the area of outsourcing of securities settlement in order to provide structured processing, and creation of a catalogue of measures and status reporting as well as establishment of an MIS for management (monthly reporting of defined KPIs).
Custody
  • Commercial bank: Analysis of the strategic options and execution of the tendering process for the sale of the custody and clearing business by a German commercial bank.
  • Landesbank (regional state bank): Implementation of the RFP process and evaluation of offers within a project to reorganize the custody network in order to save costs.
  • Public-sector bank: Migration of the global custodian for foreign business (including proprietary trading and custodian bank/special funds)
Selected Project Profile: Migration Global Custodian
  • The client is a German custodian bank which, at the start of the project, has transacted international business via a global custodian based in the UK.
  • The objective of the project was to examine the existing custodian connections under consideration of economic aspects and regulatory requirements as well as the establishment of detailed Service Level Agreements (SLA’s).
  • One of the reasons for the decision to migrate to a global custodian based in Germany was the increasing regulatory requirements (e. g. the BaFin’s Custodian Circular of Summer 2010) and the associated increased monitoring obligations of custodian banks for foreign business, as a German custodian is also directly subject to regulation by the BaFin.

WEPEX Tasks and Project Approach

  • Management of the migration to the new global custodian
  • Recording of the departments affected by the migration and the affected systems
  • Development of the business and system migration strategy
  • Preparation of the migration plan and coordination with the relevant departments (nearly all functions in the back-office of the custodian bank were affected, e. g. foreign settlement, settlement of repo/loan transactions, money bookings, money management, settlement of depositories, etc.)
  • Delimitation of the test scope and development of the test strategy
  • Creation of test planning and coordination with the relevant departments/systems
  • Management of the test execution (test of the migration including integrative tests with the new Global Custodian and tests of the daily processing after migration)
  • Management of the old/new global custodian with regard to migration and testing
  • Obtaining the necessary approvals for migration
  • Planning of the migration weekend and coordination of the planning with the parties involved
  • Management of the migration implementation on the migration weekend
  • Post-migration support

Findings

Migration of approx. 600 custody accounts with approx. 30,000 positions and approx. 60 billion EUR equivalent in time and budget. Enhancing the benefits of the overall project (e. g. improvement of service quality through SLA’s, simplified and more cost-effective implementation of regulatory requirements for foreign business, and reduction of “run the bank” costs).