Money managers today face a tall order of needing to meet compliance expectations, all while retaining a competitive edge. In many cases they struggle, as their infrastructure does not enable them to properly manage the risk and reporting requirements of regulations such as Basel III, Solvency II, EMIR and others.
So what’s the solution? More top-performing firms are choosing to do away with inflexible technology infrastructure and adopt innovative portfolio and risk management systems that provide utmost flexibility to adapt quickly to changes in regulation, market practices and business demands. Below are examples of three firms successfully using such technology to better manage regulatory complexity and enhance competitiveness.
1. The Phoenix Group
The Phoenix Group is the largest UK consolidator of closed life assurance funds. Among other things, the firm wanted to introduce a financial analytics solution that could help them manage Solvency II requirements.
Phoenix needed the ability to interpret and analyze regulations, and evolve internal models to better manage risks. These tasks require significant computing and modeling power to run through various scenarios and evaluate the best way of calculating capital, subject to Solvency II constraints. Following a review of marketplace solutions, Phoenix chose FINCAD F3.
“Using F3, we have been able to validate and augment our existing risk monitoring processes. Frequent scenario analysis helps us make more accurate, timely and thus, more effective, investment decisions. As a consequence, we have been able to reduce market risks and improve the firm’s balance sheet. Once set up, the F3 models work seamlessly to reflect the change in risks and returns across various economic and regulatory reporting metrics and on-the-fly scenarios.”
- Deputy Head of Investment Risk & ALM Strategy, The Phoenix Group
Learn more about Phoenix Group.
2. Mitsubishi UFJ Financial Group (MUFG)
Mitsubishi UFJ Financial Group, Inc. (MUFG) is a bank holding and financial services company headquartered in Tokyo, Japan. MUFG is Japan's largest financial group and the world's second largest bank holding company.
The bank needed to calculate credit valuation adjustments (CVA) for their various trading counterparties in order to meet Basel III requirements. Therefore they sought a solution for CVA reporting. Already a satisfied client using FINCAD’s Insight solution, the natural choice was to examine FINCAD’s F3 CVA service offering.
“We find FINCAD solutions to be easy-to-use and extremely reliable. Additionally, the support team provides knowledgeable answers and quick service which makes a big difference to us. These factors had a large impact on our decision to go ahead with FINCAD’s CVA service offering.”
- Ronald Hart, Associate Director, Treasury Division, MUFG Bank (Europe) N.V.
MUFG now relies on FINCAD for accurate and efficient CVA calculation and reporting on a book of interest rate swaps, basis swaps, and cross currency swaps, in addition to approximately 2200 FX forward contracts. This covers a total of 55 counterparties.
Learn more about MUFG.
3. Arca Vita Case Study
Based in Verona, Italy, Arca Vita Spa offers life insurance services to retail, private and corporate clients. Arca Vita required a robust analytics library for derivatives valuation that could integrate with Excel, and help them perform detailed ALM analysis for Solvency II compliance.
The insurer found the level of sophistication they needed in FINCAD. Their finance department now uses FINCAD for ALM analysis on their insurance portfolios, including pricing vanilla and structured bonds, and for building term structures of interest rates under the Hull and White model. “
FINCAD enables us to constantly monitor our portfolios, and conduct detailed ALM analysis, helping us meet requirements of Solvency II.”
- Alberto Tortilla, Finance Department, Arca Vita
Learn more about Arca Vita.
Watch our brief video for more information on how FINCAD F3 helps firms improve risk management in order to better manage regulatory complexity and enhance competitiveness.