Frances Maguire
Frances Maguire

Addressing risk, connectivity and regulatory complexity in Post Trade FX

While the FX industry is well versed in addressing the challenges of connectivity and the operational and credit risk in the back office arising from spiralling volumes, Frances Maguire asks how it will deal with more complex regulatory demands in the post-trade arena.

In one sense the new regulatory requirements being drafted could actually do the FX back office a favour. Banks are already grappling with the fact that the need to process and risk manage spiralling volumes and smaller ticket sizes means that, in many cases, the back office is holding the front office back from going after new business. As banks need to bring the back office up to speed anyway, now having to respond to more onerous and complex regulatory requirements will mean that bigger budgets will have to be allocated to the back office. The back office has been playing catch-up for a few years now in a bid to fully automate the trade lifecycle across different systems and fully utilise netting to be able to process more tickets, faster. Volumes Sang Lee, co-founder and managing partner of Aite Group, believes the biggest issue driving change in the FX back office is the need to process greater volumes. He says: “The assumption is that trading volumes in the bilaterally over the counter...continued

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