Our client, a global financial services provider, was subject to a new regulatory requirement around Initial Margin (IM) for non-centrally cleared derivatives. This required the client to move from Variation Margin to Initial Margin calculations.
The regulatory timeline depended on the firms “aggregate average notional amount” (AANNA) of non-centrally cleared derivatives. Our client identified that hundreds of their customers were in scope and needed to be processed by the regulation deadline, creating a potential revenue loss of over USD $1 Billion.
To rectify this, two pieces of work needed to be completed:
Aston Carter utilised our global coverage and connected with our UK team who had successfully delivered an IM transformation project for a UK investment bank. Leveraging our UK experience, Aston Carter was able to identify a key skill gap in the client's team and deploy Project Management and Business Analysis talent with the required regulatory reform expertise.
Aston Carter supported the analysis of each customer to determine their AANNA threshold. We identified over 200 customers who fell in scope and would require repapering before the mandated deadline.
Due to the number of customers identified, we coordinated several meetings with the sales and trading teams, ensuring the financial impact of this change is clear and communication is extended to the affected customers.
Aston Carter successfully completed the repapering exercise for all 200 customers, ensuring that the legal documentation was all in place by the regulator’s deadline. To mitigate business impact, customers were repapered in order of importance, ensuring that business-critical customers were able to continue trading and were not impacted by the regulatory changes.
During the project, Aston Carter identified that customers in Korea would take significantly longer to process due to manual handling. We proactively worked with the automation team to create a custom-made solution for those customers, ensuring they are processed on time and with no disruption to trade.
Due to our success on this project, the Head of Regulatory Change engaged Aston Carter to work on their most critical regulatory projects for the following year, including IBOR and FRTB.