Structured Trade Review for a large US Bank with highest self-review accuracy leveraging automation
Client : A large US bank
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Objective
Functional Mandate
To create an organisational model for global Structured Trade Review (STR) as an independent risk management function for one of the biggest US investment banks
To build and maintain STR processes globally in BAU Mode
To risk-prioritise review of historic inventory trades
Corporate Audit Deadline
Stringent corporate audit deadlines to review the historic inventory trades
To make the process sustainable, the business logic of edit control, new deal review and historic review had to be applied
Edit control and new deal review capabilities and process had to be set up
Project Management Team
A central project management team comprising CRISIL GRA and client representatives set up
A workflow checklist approach finalised for implementation across asset classes, considering strategic requirements of the project
Key decisions regarding scope of review, depth of review, review process maps standardised for all stakeholders
Governance and Reporting Standards
To build a workflow tool platform to streamline the review process across asset classes
To facilitate centralised monitoring of trade review
To have a centralised MIS reporting and analytics platform
Creation of a centralised knowledge repository for future reference and a deal library for all exotic products and review standards
CRISIL’s solution
Due Diligence and Analysis
Kick Off -
Onsite team – Project team from Crisil GRA interacts with stakeholders. System and population analysis completed for the asset classes where there is no review process
Identified competent resources to handle complex trade review across asset classes
Training and ramp up of STR team
Trade review – Go Live
Time - 2 months
Review for BAU commenced and other control process initiated to manage amendments to bookings
Identified historical trades and commenced review process
Covered 6 asset classes and reviewed close to 25 BAU trades and 20 historical trades per day
Ramp-up and Steady state
Time - 6 months
Further ramp up of team to manage the inflow of BAU trades and backlog of historical trades
Reviews increased to around 55 BAU trades and 60 historical trades per day
Serviced ad-hoc requests such as book transfer during strategic changes, Front office requests on booking checks, process improvement tools, and creation of web-based MIS for relevant stakeholders
Current State
Today - 30 months
Completed historical trade review and BAU reviews stabilised in the first year.
Resources ramped down to handle pending queries in historical trades and manage BAU reviews including amendments
Reviewed around 80,000 trades; gross PV impact of the errors identified crossed 79 million USD
Client impact
Project Management
Comprehensive ownership of the STR function to cover 100% of all exotics traded globally on all asset classes including structured notes
Risk Management
Developed the STR function from being a 'control activity' to an independent risk management function. STR review had an accuracy rate of more than 99.95%
Trade Reviews
Reviewed around 80000 trades with a MTM impact of more than USD 79m
Resource Management
Provided flexibility by moving people across asset classes in the STR function to suit organizational and project requirements
Knowledge Management
Delivered exotic products and processes training to stakeholder groups and line of business through a highly skilled pool of associates
Analytical Reporting
Created workflow tools and reporting suites to provide high value analytical reporting. Developed the centralised STR workflow tool and reporting suite to enable synergies across asset classes
Automation
Automated the population validation and feeds to the STR workflow tool and automated management reporting
Request for services
Questions
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