KRM22 January News
Happy New Year
We hope you are all had a wonderful festive period and are looking forward to a new year. We’re back with our monthly round up of industry news and thoughts on the challenges facing risk management in capital markets.
In The News
Cyber Risk at the Forefront for Infrastructure Firms
Just before the holiday break, Risk.Net published the third round of it’s operational risk benchmarking survey. This time, the focus was on Financial Market Infrastructure (FMI) firms and included exchanges, clearing houses and payments systems.
The survey highlighted that it is vitally important that FMI firms’ “lights stay on, no matter what”. This put cyber and resilience risk right at the top of their priorities.
When it comes to managing the risk of IT disruption, one standout from the report was the diversity of the information sent to the board. “Five FMIs include key risk indicators and four mention qualitative discussions of risk exposure. FMIs 1, 6 and 7 also include exposure estimates from scenario analysis, while FMI 3 favors modelled exposures.”
Regulatory exposures also featured, with Risk.Net highlighting that “many of the key risk indicators used by FMIs for compliance risk feel somewhat generic – the controls, even more so. Most firms don’t model their exposure. Much of the risk management work is left to the compliance function.”
We have developed the Risk Cockpit to help with these very issues. The system’s ability to track both inherent and residual risk, and put associate a value to it, allows firms to take choose their own modelling techniques and standardize the analytics, display and reporting functions.
Speak to our sales team to find out how Risk Cockpit can help you.
FCA Consulting on Reforming the Commodity Derivatives Framework
The United Kingdom’s Financial Conduct Authority (FCA) has announced a consultation into potentially reforming the commodity derivatives regulatory framework
Law firm Shearman & Sterling has analyzed the proposals and highlights that they changes cover position limits, exemptions from those limits, position management controls, the reporting regime and ancillary activities test.
Perhaps the key change suggested is the transfer of the powers for setting position controls from the FCA to the trading venues. Shearman & Sterling go on to highlight that “this contrasts with the EU approach, where position limits are not just set by the regulators, but actually in formulae in legislation, which have proven ill-thought-through and problematic for numerous markets.”?
With the consultation running until February 16 2024, this will undoubtedly cause much discussion within the derivatives risk management community. We will be keeping abreast of all the developments and investigate how our Trading Risk product set, Limits Manager and Risk Manager, can help firms should the requirements change.
Contact us to find out how we can assist you with your regulatory requirements.
Blogs
The Crucial Role of Stress Testing and Scenario Analysis in Derivatives Risk Management
In last month’s newsletter and blog, we took a look at the challenges facing derivatives risk management. Following on from this summary, we now drill down into at how stress testing and scenario analysis has become a hot topic, and how the Risk Manager provides help in this area.
Read about our view of each of these areas, and how Risk Manager helps address the problems facing the industry.
Unveiling Data in Market Surveillance Systems
In an era of stringent regulatory frameworks, compliance is non-negotiable. When it comes to adhering to market abuse, the market surveillance system has become more embedded in the firm’s technical infrastructure. The beating heart of this system is the trading and market data. In our latest Market Surveillance blog, we delve into the importance of this data and how KRM22 ensures it flows to support the compliance team.
Announcements
New Contracts and Renewals
This month, we are thrilled to announce two new contracts and a long term customer renewal.
Our Market Surveillance platform was further enhanced by two signatures. The first was through our partnership with Bovill and their innovative Market Abuse Surveillance Managed Service, with the second being a long term renewal of an existing customer. These two signatures show our commitment to building complimentary relationships with partners and customers.
For our Trading Risk products, we completed a new long term contract with a Chicago based broker dealer for Post Trade Stress and Real Time Margin services. The firm, which has a focus on using the best technology to provide cutting edge services to its customers, has committed to a three year deal with KRM22.
Read more about each of these new contracts