IBS Journal April 2015
Double-edged sword
BNP Paribas Securities Services has had a busy few years. Regulations, particularly EMIR and Dodd Frank, have driven ever more business to its doors and, in parallel, it has been implementing the Calypso system. IBS caught up with global product manager for OTC derivatives, Dominique Iroz.
For service providers, regulations are a double-edged sword. On the one hand, they are a burden, requiring considera- ble investment. On the other, they are an opportunity, as they can generate signifi- cant business from existing and new cus- tomers. BNP Paribas Securities Services has seen both sides of this. It has been busy putting in all of the changes needed to meet the regulations and has also had its hands full with RFPs as ever more financial institutions seek compliant solutions. To add to its workload, it has been implement- ing a new platform, Calypso, with the pro- ject nearing completion.
Today, the business is housed in a
large campus, Grands Moulins de Pantin, on the outskirts of Paris, converted from a 19th century industrial complex that used to produce cereals. The Securities Services business primarily provides middle office services to buy-side clients, with a focus on OTC derivatives. Dominique Iroz is global product manager for OTC derivatives, with a role to adapt the services to new instru- ments and regulations. On the regulatory side, EMIR has been
the main area of attention, although as BNP Paribas has clients with funds in the US and Asia Pacific, it has also had to contend with
Dodd Frank in the former and emerging EMIR-like regulations in the latter. The reg- ulations have been a major challenge for market participants, which has persuad- ed ever more of them to look towards out- sourcing. At present, Iroz and his team are responding to typically one or two RFPs per week. The task has included a lot of presentations, in part to educate clients on what is needed. The initial requirements for EMIR were in 2013 and they will roll on until at least 2018. The concept of ‘timely confirmations’ was the first hurdle, spanning both affir- mation (with participants recognising the trade based on two or three characteristics) and full confirmation. For this, BNP Paribas uses the electronic platforms of ICE Link for credit default swaps and, for interest rate swaps, MarkitServ. Most of the mar- ket was previously using manual confirma- tions so BNP Paribas has helped customers to migrate. In September 2013 came ‘portfolio rec-
onciliation’ under EMIR, with a need to rec- oncile positions with counterparties and, for this, BNP Paribas chose TriResolve, the TriOptima platform. This replaced the previ- ously rather haphazard situation whereby reconciliation was sometimes done on a case by case basis, or was not done at all, largely based on the relationship between the institutions. Most broker-dealers use TriOptima and it was a straightforward choice, says Iroz. The regulatory change was a very positive one for the market, he believes. February 2014 saw the start of report-
Home of BNP Paribas Securities ©Adeline Bommart
ing to trade repositories and this was extended from August to include valuation and collateral data. Also a straightforward choice, BNP Paribas opted for the DTCC as its trade repository. The DTCC’s global cov-
34 © IBS Intelligence 2015
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case study: bnp paribas
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