Recent research and white papers
EXPERT GROUP ON MARKET INFRASTRUCTURES (EGMI) REPORT
The past 10 years have seen unprecedented focus placed on the importance of post-trade infrastructure to the European economy. This report provides a clear overview of how the efforts to develop a safe and efficient clearing and settlement infrastructure for the EU have progressed and gives an in-depth view of the post-trading landscape by asset class. Post-trade infrastructure is a difficult and complex subject where finding consensus on the issues and their solutions is challenging. This report makes it clear that despite the effort and resources invested in the past decade, there is still considerable work to be done to achieve a truly pan-European post-trade infrastructure that can drive Europe’s economic potential.
‘Expert Group on Market Infrastructures (EGMI) Report’, EFAMA 2011
EGMI Group, 40 pages, October 2011
UNDERSTANDING MIFID II: DRIVING CHANGE IN THE EUROPEAN SECURITIES MARKETS
The review of the Markets in Financial Instruments Directive (MiFID II) will impact investment firms and the overarching European securities markets structure fundamentally. In addition to upgrading the current regime for equities markets, MiFID II proposes to extend this revised regime to a far wider range of product classes, including over-the-counter (OTC) derivatives and fixed-income products. It will have significant strategic repercussions for firms undertaking investment business in all securities markets. In this paper, PwC provides an overview of the EC’s MiFID II consultation paper, highlighting key objectives and specific proposals. Also examined is the legislative process whereby these changes will be introduced identifying how firms can make sure their views or concerns are heard.
‘Understanding MiFID II: Driving change in the European securities markets’, PwC 2011
PwC, 12 pages, July 2011
FINANCIAL FORESIGHT – FINANCE TRANSFORMATION FOR INSURERS: RECHARGE FOR THE RECOVERY
As the economy moves toward a recovery and new regulations unfold, insurance executives are looking to their finance organisations to support operating strategies, provide meaningful data and insights, and deliver on core responsibilities. Like other organisations, insurers are looking to strategically improve processes or systems that might have been neglected by the business demands in more prosperous times, but do it with a holistic view of what their end-states should look like. To accomplish these objectives, some insurers are turning to a process known as finance transformation to help create more value by focusing on the four roles that CFOs play. These roles include: steward, operator, strategist and catalyst. As stewards and operators, CFOs fulfil a vital function by maintaining accurate financial records in a cost-effective manner. However, there may be additional opportunity for CFOs to drive value in organisations as strategists and catalysts by contributing to and leading company-wide dialogue and decision-making. This report describes how insurers can gain a distinct competitive advantage by reducing costs, improving controls, and providing high-quality service to stakeholders of their finance organisations.
‘Financial Foresight - Finance transformation for insurers: Recharge for the recovery’, Deloitte 2011
Deloitte, 4 pages, 2011
INVESTMENT FUND INDUSTRY FACT SHEET
The European Fund and Asset Management Association (EFAMA) published 14 October 2011 its latest Investment Fund Industry Fact Sheet. Entitled ‘Turmoil in financial markets sees investors retreat to safe havens in August 2011’, the fact sheet provides investment sales and asset data for August 2011. Associations representing more than 97% of total UCITS and non-UCITS assets at end August 2011 provided input regarding net sales and/or net assets data.
‘Turmoil in financial markets sees investors retreat to safe havens in August 2011’, EFAMA, 2011
EFAMA, 2 pages, October 2011
SYSTEMICALLY IMPORTANT FINANCIAL INSTITUTIONS (SIFI): WHETHER IN OR OUT, START PREPARING NOW
As more and more of the provisions included in the 2010 Dodd-Frank Act are clarified and put into practice, increasing attention needs to be paid to the actual impact on the US financial industry and on its domestic and international stakeholders. One of these impacts includes the definition of systemically important financial institutions (SIFI) and what this designation means to investment managers deemed to be a SIFI. This white paper defines the purview of SIFI and examines the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act’s explicit mandate to protect the US financial system from systemic risk. It also addresses questions such as how firms can measure up in terms of capital and infrastructure, and whether they can meet the need for a living wills regime, credit-exposure reports and stress testing requirements.
‘SIFI: Whether in or out, start preparing now’, Deloitte, 2011
Deloitte, 8 pages, July 2011
THE ARCHITECTURE OF INTEGRATION: AN ESSENTIAL GUIDE TO SUCCESSFUL MERGERS AND ACQUISITIONS IN FINANCIAL SERVICES
The report examines the main themes of the global financial services M&A market over the last three years, and looks forward to what the financial services sector might expect in the short to medium term. It focuses on the strategic priorities that have been driving financial services companies to dispose and acquire in this period, in an attempt to pin down the key factors that can distinguish successful transactions from potential failures. Some of the key findings include: the wave of deals following the recession is now at an end; there is a new wave coming; competition will come from Asia-Pacific buyers and from a resurgent Private Equity sector; cost cutting has given way to revenue growth as a primary deal driver; growing through acquisition is the new normal; markets are still sceptical of values based on revenue synergies, but they can be persuaded by a well-supported argument; old issues with poor planning, poor communications and lack of attention to cultural differences still persist; there is real value to be gained from solving these problems.
‘The architecture of integration: An essential guide to successful mergers and acquisitions in Financial Services’, KPMG 2011
KPMG, 36 pages, September 2011
EFAMA PUBLISHES LATEST STATISTICAL RELEASE
The latest quarterly (Q2) international statistical release published 20 October 2011 by the European Fund and Asset Management Association (EFAMA) revealed a number of findings regarding the worldwide asset management industry. The findings include the status of the global AUM for funds; inflow into long-term investment funds; inflow into money market funds; the distribution of equity funds, bond funds and money market funds; and the market share distribution geographically. The collection for the second quarter of 2011 contains statistics from 45 countries.
‘Worldwide Investment Fund Assets and Flows – Trends in the Second Quarter 2011’, EFAMA, 2011
EFAMA, 9 pages, October 2011
THE AGILE ASSET MANAGER
Through case studies, interviews with C-level leaders at investment management companies and their own research/expertise, KPMG puts forth its views on how a focus on agility will help asset managers achieve competitive advantage. The white paper draws on the input of the C-level interviewees and makes strategic recommendations with respect to organisational structure and competency development. The intention is to stimulate debate on why agility is becoming an increasingly critical competence in helping asset managers outmanoeuvre and outperform the competition and discuss how agility can be created and deployed in support of developing and operationalising strategies. The white paper also includes a number of case studies, which bring to life how some of the 26 CEOs, 5 CFOs and 6 COOs of leading asset managers who have been interviewed are creating and deploying agility in the context of their strategic priorities.
‘The Agile Asset Manager’, KPMG 2011
KPMG, 32 pages, August 2011
DODD-FRANK ACT: COULD THERE BE ACCOUNTING CONSEQUENCES?
The Dodd-Frank Act contains numerous provisions intended to strengthen corporate accountability that will affect all US public companies and many private ones. Among the provisions that are of immediate concern are those dealing with asset-backed securities, required disclosures relating to executive compensation, incentive compensation claw-back requirements under certain conditions, and OTC derivatives. Many of these also require new reporting practices or reports. Discussing some key aspects of the accounting and reporting implications of Dodd-Frank, this white paper examines the impact of these provisions and how to prepare. The publication can also work as a starting point for a dialogue about ways to evaluate and address possible vulnerabilities and risks facing these businesses.
‘Dodd-Frank Act – Could there be accounting consequences?’, KPMG 2011
KPMG, 12 pages, September 2011
HOW BANKS SHOULD LEVERAGE TECHNOLOGY TO CAPITALISE ON REGULATORY CHANGE: MOVING BEYOND COMPLIANCE
Over the next several years, regulators will implement a range of risk management reforms designed to lend greater transparency and stability to the global banking system. The new regulatory environment will have a significant impact on the industry, changing not just the way banks measure and manage risk but also how they run their businesses. From a technology perspective, the task of accommodating these new requirements is a steep challenge. This report assesses how banks can leverage their IT infrastructure to accommodate new regulations and capitalise on this change. The practical application — and benefits — of such an approach are illustrated by a case study of a major European bank that transformed its risk-IT architecture as part of an effort to enhance its approach to managing risk.
‘How Banks Should Leverage Technology to Capitalise on Regulatory Change: Moving Beyond Compliance’, BCG 2011
Boston Consulting Group, October 2011
ACCENTURE 2011 GLOBAL RISK MANAGEMENT STUDY: CAPITAL MARKETS INDUSTRY REPORT
As part of its 2011 global risk management survey, Accenture interviewed around 50 C-level executives from capital markets companies globally. The survey addresses risk management in these companies and how an effective risk management IT & organisational infrastructure can be leveraged as a source of competitive advantage. According to responses, risk management is a higher priority and source of competitive advantage and high performance in the capital markets industry. It is clear that the C-suite has bought into the idea that risk management has a vital role to play in ensuring long-term competitive advantage, and ultimately high performance, in what has become a very uncertain and competitive business environment. Despite this, however, the survey also reveals serious challenges.
‘Accenture 2011 Global Risk Management Study: Capital Markets Industry Report’, Accenture 2011
Accenture, 12 pages, July 2011
TECH TRENDS 2011: INSIGHTS FOR INSURERS ON THE NATURAL CONVERGENCE OF BUSINESS AND IT
The report shares the technology trends insurance company CIOs and business executives face today, with inputs from industry participants, analysts, alliances and academic leaders and subject matter advisers. The trends are clustered in two categories: ‘disruptive deployments’ present significant new opportunities to improve business processes, rethink operations or even enter into new business models - the technologies themselves may not be disruptive, but in being deployed they may well disrupt the cost, capabilities, or even the core operating model of IT and the business; and ‘(re)emerging enablers’ are trends that many technology executives have spent time, thought and resources on in the past but Deloitte argues they deserve another look due to specific factors in the technology or business environment. Woven through many of the trends is the growing convergence of cloud, social and mobile computing, analytics and cyber-security, fundamentally changing how information is accessed and used in business operations and decision-making. The focus is less on the mechanics of technology. The mentality of ‘there’s an app for that’ captures the essence of this change, engaging users wherever and whenever they choose.
‘Tech Trends 2011: Insights for Insurers on the Natural Convergence of Business and IT’, Deloitte 2011
Deloitte, 64 pages, 2011
NINTH ANNUAL FAIR VALUE PRICING SURVEY: MANAGING RISK THROUGH TIME-TESTED PRACTICES
In the ninth annual Fair Value Pricing Survey, Deloitte presents a number of findings related to tracking valuation policies, industry practices, and governance and oversight procedures used by leading asset managers. One finding is that although several major international crises and other events occurred during the year that required the attention of asset managers, none of them had the same impact on the valuation process as the global credit crisis that preceded them. In the previous years, mutual fund groups have reported to continually make changes to their valuation policies and procedures, and these efforts appeared to bear fruit over the last year with only minimal adjustments. Summaries are included by four subject areas of certain noteworthy survey results: valuation governance, policies and procedures, pricing sources, and specific investment type fair value considerations.
‘Ninth Annual Fair Value Pricing Survey: Managing risk through time-tested practices’, Deloitte 2011
Deloitte, 12 pages, 2011
New reports published and information considered worth publishing can be submitted for review to: Co-Editor Mette Trier, mette.trier@simcorp.com
