IBS Journal April 2015


‘[The mismatch between the different regulations] is a challenge for the industry and we hope the issues will be resolved soon.’


Dominique Iroz, BNP Paribas Securities Services


ticularly in the area of equity contracts for difference (CFDs), with promises of support failing to materialise. Thomson Reuters, as it became, was considered when BNP Par- ibas started to evaluate new platforms, so too the likes of Murex (‘too expensive’) and Misys’ Summit. The need was for a system that was


more robust and better able to handle complex instruments. BNP Paribas Securi- ties Services was also looking for improved automation and easier connectivity to the various OTC platforms. BNP Paribas Cor- porate and Investment Banking (CIB) uses Calypso for the bulk of its activities and was happy with the system. Calypso also scored points by having a good understanding of the new regulatory requirements that were on the way (Iroz felt Thomson Reuters, in particular, was a bit behind here). Calypso is now live. There were ‘of


course’ some issues with the project at the outset. As has been heard elsewhere from Calypso projects, it can take a while for users to understand the system as there is a lot of parameterisation, so the set up is onerous. There were a few resource issues, which wasn’t surprising, given the sales success of the vendor in the last few years, but these were resolved. Today, around 80 per cent of BNP Par-


ibas Securities Services’ 20,000 positions have been migrated, with the rest due to be moved across in the next month or so. At that point, after a parallel run, KTP will be switched off. Calypso is installed in Paris and takes in trades from around the globe. For the business that has already been moved across, the hoped for benefits are being realised, says Iroz. Client reporting is


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much easier and there is much improved monitoring of options, which is an area where a number of clients are very active, he says. The credit default swaps module of the system has made it a lot more straight- forward to monitor and manage credit events. There was communication about the


project with some of the largest custom- ers but this was not felt necessary for most, as they were not affected. The project has been on time and smooth. ‘I think we took a good decision,’ says Iroz. It now has a strong platform on which to meet all of the future regulatory needs. As well as the interfaces to ICE Link and


DTCC, MarkitServ and TriResolve, there are interfaces to BNP Paribas’ fund account- ing systems around its different operations, including Chorus in France, Multifonds (recently bought by Temenos) in Germany, Luxembourg and Italy, and the DST-derived HiPortfolio (now owned by SS&C) in the UK. This allows OTC trades to be booked in the fund accounting systems to calculate the net asset value (NAV). BNP Paribas has looked in the past at whether or not to try to standardise on fund accounting systems but there are no plans at present, as it was decided that the market is very localised. There is plenty of work still to do, of


course. The implementation of OTC clear- ing will be a huge piece of work, predicts Iroz, and the market will be watching close- ly to see how this fares in the US. As men- tioned earlier, MTFs will replace voice and, while there are some unknowns, such as how reconciliations with clearing brokers will be done, there is enough knowledge to start to consider the operating model and


© IBS Intelligence 2015 www.ibsintelligence.com


workflows, says Iroz. ‘We need to be very well prepared.’ There will be aspects, such as what happens if a trade is not cleared, that will be very important for customers, says Iroz. As timescales stand at present, the phased introduction of clearing within EMIR will start in summer 2016 for clients (asset managers and asset owners) with the large clearing firms and central counterparty clearing platforms (CCPs). There will then be four phases, of clearing firms, financial counterparties above a certain threshold, followed by those below this, and then non-financial counterparties. Most of BNP Paribas’ clients are likely to be in the third phase. There are plans to rationalise the infra-


structure further by moving to shared platforms between the BNP Paribas CIB and Securities Services businesses, and derivatives will be in scope, as many of the changes in the OTC derivatives sector have brought far greater similarities with listed derivatives, which is the aim of the regu- lators. It is clear that the Securities Services


part of the French bank has its hands full at present with further regulatory change and responding to all of those RFPs. Unlike some of its competitors, it is seeking to pro- vide services across all areas (Iroz believes some rivals are shying away from report- ing to trade repositories in particular) and it sees a competitive advantage in its ser- vice offering. No doubt, in its industrial hey-day, the Grands Moulins area was a hive of activity, and although without the same noise and bustle, that remains the case today.


case study: bnp paribas


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