Treasury Management Internation Logo

SunGard Launches Industry Utility to Transform Derivatives Clearing Processing Globally

Published 

SunGard is launching a new industry utility for post-trade futures and cleared over-the-counter (OTC) derivatives operations to help global capital markets firms better adapt to new market challenges and to respond to post-financial crisis cost pressures. This industry utility will enable derivatives brokers, including Futures Commission Merchants (FCMs), to achieve greater efficiency, reduce operational risk and total cost of ownership (TCO) by leveraging economies of scale in middle and back office processing and technology. Barclays, an industry leader in the global cleared derivatives industry, will become the utility’s first customer. Barclays will also migrate specific futures and OTC derivative clearing operations and technology processes to the utility, and a number of Barclays employees will transfer to SunGard.

Increased regulations such as those mandated by the Dodd-Frank Act (DFA), European Market Infrastructure Regulation (EMIR) and Basel III have created an operating environment that continues to erode profit margins. According to a Tabb Group study, the challenging market conditions in recent years has resulted in a reduction in the number of CFTC-registered FCMs by 49%. The Tabb Group study also found that these ongoing structural changes and regulatory pressures are driving remaining FCMs to look to more efficient and cost-effective ways to manage their back office operations.

Tim Stack, head of agency derivatives services at Barclays, said “Barclays has always taken a proactive approach to managing its business and adapting to regulation. By taking this leadership position with SunGard, we are able to provide our clients with a practical solution that keeps our products and services at the forefront of the industry. We are confident that this utility is a transformational change for the industry, and that it will help provide clear benefits to our clients, to Barclays and to the industry as a whole.”

Brian Traquair, executive vice president of SunGard Financial Systems, said “Post-trade cleared derivatives processing is highly commoditized, providing little differentiated value to each firm at increasingly higher costs due to today’s regulatory environment. SunGard’s post-trade derivatives utility will help transform the cleared derivatives middle and back office across the entire industry, resulting in a more sustainable operating model and cost structure for the future. We are investing in and building this solution and others like it as part of the `Next SunGard` to continue to advance best practices across the industry in terms of operational controls and operational risk management at a more manageable cost.”

Larry Tabb, founder and CEO, Tabb Group, said “With well over half of post-trade derivatives processing replicated in each clearing firm, consolidating a majority of these non-differentiating operations into a single shared industry utility will positively change the economics of the industry by increasing efficiency, simplifying regulatory compliance and altering the cost structure for industry participants. Reframing the existing business model will enable FCMs to focus efforts and investments on clients and risk-facing activities. The introduction of a derivatives utility is expected to be transformative because it will essentially re-define the cleared derivatives operating model for the industry and drive sustainable efficiency improvements through standardization and best practice implementation, automation and scale, as well as ongoing TCO savings for utility customers.”

SunGard, a recognized leader in post-trade derivatives processing, will provide utility customers with derivatives clearing operations and technology services for trade clearing, trade lifecycle management, margin processing, brokerage, reconciliation, data management and regulatory reporting. The utility technology platform will be underpinned globally by current and future SunGard solutions, such as its global back-office processing system for listed and cleared OTC derivatives, covering more than 160 cleared derivatives markets in 38 countries.

Most recent episodes

HSBC’s Sibos Spotlight: Investing in the Future – from Diversity to Green Deposits

In the final instalment of HSBC’s Sibos Spotlight, Eleanor Hill (TMI) invites Nadine Lagarmitte and Suraj Kalati (HSBC) to consider how corporates’ attitudes to...

25:12

HSBC’s Sibos Spotlight: The ESG Landscape – what every treasurer needs to know

In the third edition of HSBC’s Sibos Spotlight Podcast series, TMI’s Eleanor Hill invites Farnam Bidgoli (HSBC) to provide an in-depth overview of the current ESG...

16:24

The Path to Transformational Global Cash Visibility

Davina Bradley (CEVA Logistics) and Conor Deegan (CashAnalytics) join TMI’s Eleanor Hill to explore how treasurers can transform their cash visibility and forecasting within their business in a matter of weeks using a...

33:16

HSBC’s Sibos Spotlight: Embedding ESG in Trade and Supply Chains

In the second podcast from HSBC’s Sibos Spotlight series, TMI’s Eleanor Hill speaks to Surath Sengupta (HSBC) about embedding ESG into trade and supply chains....

20:58

Lost in Transaction: Overcoming Payments Pitfalls

From simple errors to duplicates, fraud and sanctions violations, there are a number of areas where payments can go wrong – especially in the real-time environment. In this podcast, TMI speaks to Andrew Ferrao...

34:25

HSBC's Sibos Spotlight: Central Bank Digital Currencies

The first edition of HSBC’s Sibos Spotlight series sees TMI’s Eleanor Hill joined by Mark Williamson and James Pomeroy (HSBC) to discuss the hot topic of Central Bank Digital Currencies (CBDCs). Our guests discuss...

25:48

Payments Vision 2025: The Inside Track

Wim Grosemans, Steven Lenaerts (BNP Paribas) and Wim Raymaekers (SWIFT) join TMI’s Eleanor Hill to outline their vision for the payments landscape in 2025. Our guests consider how recent developments such as instant...

28:21

Stepping Out from the Shadows

“Treasurers needs to step out of the shadows and into the sunshine in terms of their strategic contribution.” claims Zitah McMillan, Co-Founder and CEO, Predictive Black. In this podcast, hosted by TMI’s Eleanor Hill, our guest declares that the...

16:54

Why the ‘One Size Fits All’ Approach is Outdated - A Cash Segmentation Treasury Masterclass

With the ongoing low interest-rate environment and increasing regulatory change, it’s more important than ever for treasurers...

23:55

Instant Payments: Instant Rewards

TMI’s Eleanor Hill sits down in the virtual TreasuryCast studio with J.P. Morgan’s Global Head of Real-Time Payments, Cyrus Bhathawalla, to discuss how treasurers can capitalise on the evolving nature of real-time payments. Our guest contemplates the elements...

23:55