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Adding Value to Your FRTB Implementation

What Now?

FRTB is a hot topic in banking today. It can be overwhelming to be tasked with having to implement the technical changes involved in bringing a bank into line with these new regulations. It’s important to make sure that you’re encouraging growth, ensuring profitability, and creating value, rather than making changes just to satisfy the regulatory bodies. This is an opportunity to dedicate time and energy to improving your risk and trading systems. However, the process needs to be executed carefully to ensure that you aren’t creating further work and uncertainty for your team later down the line.

That’s why all our specialists are trained in both banking and technology. We understand the business requirements and structures involved in your institution. When we are invited to assist with an FRTB implementation, our trained experts can break down the best ways to optimize the implementation to not only satisfy new regulations, but create safer, stronger trading environments.

In 2016 and 2017 a lot of time was spent on implementations that have now been postponed or required costly changes to complete. It’s important to understand the nuances of your national regulators to ensure your FRTB implementation isn’t changed down the road. Different governing bodies will favor different approaches, particularly for Internal Models. With 8 offices across the American economies, we are perfectly positioned to provide advice and support throughout the Americas.

FRTB Internal Models don’t need to be implemented all at once, and in many cases, it can be beneficial for you to work selectively on areas of FRTB that are more concrete, providing you already have SA in place. National regulators often lean towards one change or the other and following their pattern may be the best way to keep yourself in line with regulations and ahead of your competition.

The new FRTB regulations don’t need to be an excessive burden. Yes, there will be tighter controls, but those controls are about to extend to everyone else too. Furthermore, there have been some positive revisions. With the recent modifications to the 2016 regulations, the capital changes you’ll face can be lower than what was originally proposed.

 

What Next?

The world is changing. Those who set in place a strong FRTB implementation will lead the change.

CPQi has grown as a result of the changing world. Established during the financial crash, our mission has always been to support and foster change in capital markets, and we have grown exponentially since as a result of our integrity and delivery. Unregulated, unsustainable banking is not profitable in the long term. The turn in 2007 taught us that those we previously thought untouchable were in truth, so close to the fall. There is a reason the Basel Committee chose this path: it is to save us from the tumultuous nature of the changeable market we work in. By using the implementation of FRTB to create a stronger, more insightful trading system you are protecting yourself from possible failure and over allocation of capital in the future.

CPQi encourages growth and security on several fronts. Firstly, we understand the new regulations from a technological, national and business perspective and we can provide invaluable insight into the implementation of FRTB. We also understand that with the increase in market risk capital requirements it is important to find new ways to trade with an edge.

With the Jan 2022 deadline looming you are going to need technology that will report with greater accuracy and visibility. Compliance personnel will be asking for more from banks. There is a greater need to support calculations that are required by FRTB. Data will need to be standardized and cannot be fragmented and difficult to obtain when compliance personnel ask for it. All assets need to be reviewed and categorized. An appropriate system needs to be put in place to designate assets correctly.

With the new regulations the accuracy of your trading projections will need to strengthen. You will need to be able to back test your projected profit and loss on a regular basis. You will need to be able to calculate your Expected Shortfall under stressed scenarios and conditions, so you need a predictive system with incredible accuracy. With CPQi’s trained specialists you can strengthen your long-term profitability as well as bring your business in line with the new FRTB regulations.

This is an opportunity to increase sustainable profitability avenues and create a secure trading environment that will survive in the long term. This is a chance to get a jump on the rest of the market and use innovation and well-placed partnerships to ensure you are the leading bank of the future. Take the leap. Take it with CPQi.

For further information on FRTB download our whitepaper or get in touch with us.