What can we help with?

Plenty. We're able to lead our Clients through all manner of Collateral pain points.

This includes change problems impacting any team(s) involved in the end-to-end Collateral flow, including Front Office, Collateral Ops, Legal, Optimisation, Settlements and more.

We also specialise in the definition of target operating models, to ensure your firm meets its strategic objectives.



Our key focus areas at the moment are…

Initial Margin

The Initial Margin rules are a ‘game-changer’ for the OTC industry, imposing extensive front-to-back change onto in-scope firms.

Margin Tonic have delivered Initial Margin to multiple firms across different Phases. We support end-to-end Initial Margin services via a flexible set of advisory, analysis and delivery proposals.

The key benefits of using Margin Tonic include clear strategy, delivery acceleration and protection against non-compliance.

Vendor Deliveries

Firms have become ever-more reliant on Vendor solutions to solve Regulatory-driven problems and industry changes, particularly so in the Collateral and Legal domains.

We support and accelerate all stages of the Vendor Selection and Delivery cycle, based on Clients’ objectives such as new Regulatory functionality, reduced total cost of ownership or an automated end-to-end flow.



Scroll down for more details on our focus areas.

THE PROBLEM

The Initial Margin (IM) rules, driven by the BCBS-IOSCO guidelines, have had a major impact on both the funding and infrastructure of in-scope parties, as well as creating a brand new collateral ecosystem with new players and Vendors at its core.

Unlike the Variation Margin rules, the IM rules are a 'game-changer'....they have created a new industry operating model which has led to front-to-back technology and operational change for IM groups.

Based on lower notional trading thresholds, the volume of in-scope parties will sky rocket in 2019 (Phase 4) and 2020 (Phase 5), pulling in the smaller banks and buy-side - see the graph below. ISDA expect over 1,100 new groups to be caught in Phase 5, complicating the delivery even further.

The lesser infrastructure, expertise and headcount typically possessed by the Phase 4 and 5 firms, combined with a limited time window and the huge jump in counterparty scope, will make compliance a significant challenge for these parties. 

 
IM Phase Vols.png
 

OUR APPROACH

BACKGROUND

Margin Tonic’s specialists have delivered Initial Margin at multiple groups across different Phases.

We come with deep expertise in the business impact of the regulations, the available solutions, the associated challenges and a strong industry network.

We’re also very aware of the different delivery approach required at the Phase 4 and 5 firms compared to the Phase 1 dealers, who deployed huge budget and resource until compliance was achieved. Phase 4 and 5 deliveries must be lean, streamlined and heavily focused on automation based on the limited operational resources available.

OUR SERVICES

  • Margin Tonic supports end-to-end Initial Margin services via a flexible set of advisory, analysis and delivery proposals

  • Margin Tonic are able to support single or multiple services for your firm, depending on your bespoke needs

  • The key benefits of using Margin Tonic include clear strategydelivery acceleration and protection against non-compliance

  • Based on our previous deliveries, we estimate the full front-to-back IT and operational change will take 18 months+ for Phase 4 and 5 firms

  • In light of BCBS/IOSCO’s Mar-19 guidance, we suggest a Threshold Breach Assessment should be the short-term priority for in-scope firms to confirm whether and when their relationships will breach threshold. Only then will firms be able to confidently plan out their IM delivery.

Regardless of the stage of your Initial Margin delivery, Margin Tonic is able to help.

Margin Tonic’s end-to-end Initial Margin services

Margin Tonic’s end-to-end Initial Margin services

Initial Margin Remediation

We can also help firms who have already gone live under the IM rules and are looking to remediate and enhance their current process flows

For example, Phase 1 to 3 firms may have a need to automate key processes, deliver new Vendor systems or to create a resolution strategy for key IM audit items.

Please contact us below or more information on our services or how we can shorten your firm’s Initial Margin compliance timeframes.

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THE PROBLEM

The industry is becoming increasingly more reliant on Vendors to provide solutions and services which are either too difficult and/or expensive to build in-house. Collateral is no exception. This is especially the case since recent Regulations, such as Uncleared Margin, have imposed weighty new changes onto market players. 

As a result, there is now a greater need for firms to frequently assess and implement Vendor solutions to achieve their objectives.

The objectives for each firm will differ, though examples could be the cost-driven decision to deploy a Cloud-based platform, the outsourcing of a manual Regulatory-driven process or the benchmarking of internal capabilities to Vendor solutions in the same space.

But the Vendor Selection and Delivery cycle is long....and very effort-intensive. There are often a large number of Vendors to choose from, meaning the process can be complex and full of pitfalls.


OUR approach

At Margin Tonic we have a wealth of expertise covering Collateral Vendor solutions, having partnered with a large number of Vendors over the years. We've also had extensive experience in leading successful Vendor RFPs and deliveries.

As a result, we adopt a practical, proven approach to our Vendor Selection and Delivery cycle (see below), which can be tailored to each Client's needs. 

We can lead our Clients to select the best-suited Vendor for them and/or to define and then deliver the chosen Vendor solution into their target state architecture.  

Vendor Selection and Delivery Cycle

Vendor Selection and Delivery Cycle

Based on the Client's scenario we can either support each stage of the Vendor Selection and Delivery cycle, or individual stages as required

  • Initiation and Requirements

Once a business case has been defined, focus turns to the scope, project objectives, approach and stakeholders. 

Although our approach will be tailored per Client, Vendor assessments are almost always made easier via the upfront definition of Client-specific scope and initial requirements (at least the high priority ones). This should cover multiple key functional and non-functional groups and any additional assessment criteria i.e. cost, delivery timescales, etc.

  • Short-Listing

Once we have understood a Client's scope, objectives and initial requirements, we can help provide an shortlist of potential Vendor candidates to support a particular product, function or problem.

  • Assessment and Selection

In what can be a difficult and time-consuming process, we use a structured, factual approach to assess each Vendor.

Using the Client's prioritised requirements as the baseline, we usually recommend Vendor demos, hands-on User testing and weighted scoring against each requirements group to give the Client a complete view of each option. We also work with the Vendors to understand their future change roadmap. Selection will ultimately be the Client's decision, based on all information that we provide.

  • Target State Definition

A critical piece of work once a suitable Vendor has been selected. At Margin Tonic we use detailed analysis to define the most suitable approach for a Client's transition onto a chosen Vendor platform, whilst shaping their target state architecture and process flows in line. Typically a very heavy exercise, we rely on our previous Vendor migrations and go-lives to ensure we break down and simplify the process for our Clients.

This can include many streams of analysis, a flavour of which are IT target state definition, business process flows, data modelling, data migration, data integration, controls, reporting, Client-Vendor service model, future roles and responsibilities and more....

  • Delivery

We can lead our Clients through the implementation of a Vendor platform to ensure that everything runs smoothly on both sides.

This includes delivery planning activities, management of build work, coordination of Client and Vendor teams, go-live execution and post go-live support.