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Secured Funding Strategic Review

The Challenge

The Client’s systems and processes had evolved organically, and lacked a standard operating model across the Secured Funding functions (Repo, Stock Loan, Derivatives Margining).

In parallel, the Funds Transfer Pricing (FTP) process had become subject to increased regulatory scrutiny, requiring banks to demonstrate a transparent, consistent and equitable approach across business lines and legal entities.

Assignment – Delivered

Conduct interviews, analysis and research to:

  • Map out the Bank’s existing Organisational Structure for Secured Funding and their support functions (Middle Office, Operations, Business Controllers, IT)
  • Document each team’s methodology for transferring the economics of Secured Funding to the underlying drivers (trading activity), including processes, systems and data flows
  • Consider how the existing approach corresponded to the latest regulatory guidelines.
  • Identify opportunities and/or potential issues

Use industry knowledge and experience to:

  • Propose a Best Practice Operating model for Secured Funding, including Principles, Policies and Structure
  • Provide recommendations on the priorities and practicalities of implementing the proposal

Result – Value added

In line with the recommendations, the client has:

  • Approved a single, consistent, transfer pricing approach across all funding products of the Firm
  • Changed operational roles and responsibilities empowering the team to own to the new process
  • Introduced performance measurements and incentives for the ‘Service Providers’ i.e. providers of funding for the Firm
  • Communicated with the business to help ensure that Secured Funding costs are better understood, and are built into pricing models correctly

This has improved consistency and clarity, and ensured regulatory compliance.

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