New Operating Model Opens Path to Derivatives Clearing Profitability and Growth




CASE STORY

Credit Suisse

The derivatives market continues to experience structural changes and challenges that are driving innovation. Inefficiencies in cleared derivatives operations and technology and the increasing cost to maintain these systems require a new model. In addition, new regulations and capital requirements, coupled with a prolonged low rate environment, are hindering the success of clearing firms. At the same time, global growth, market volatility and new reporting requirements have made speed, data accuracy and risk reduction technology imperatives.

Clearing firms are struggling to adapt IT infrastructures to the changing regulatory requirements and product landscape while meeting the demands of a global customer base. Fragmented systems, redundant reporting, processing silos, and minimal standardization prevail across the industry. Many common processes are performed in similar ways by every firm without providing any competitive advantage. In fact, well over half of post-trade derivatives processing is replicated by each clearing firm across the industry.

Credit Suisse, a leader in the global cleared derivatives industry, selected the FIS Derivatives Utility for its post-trade derivatives clearing operations and technology to help rationalize and automate common, non-differentiating processes to achieve greater efficiency and consistency, mitigate operational risk and reduce total cost of ownership (TCO).




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In addition to reducing TCO, Credit Suisse will minimize the cost of ongoing mandatory regulatory and market change as the utility will now manage these changes for all clients in its multi-member environment. All utility participants will benefit from reduced cost of change and will experience less internal effort and risk of implementation. As a result, utility clients will be able to redeploy internal resources to focus on core activities to meet competitive pressures and better service customers.

In making the decision to move to the utility, it was important to Credit Suisse that there was no degradation of service levels and that the overall customer experience continue to be a unique value proposition for the bank. Leveraging this scalable infrastructure, Credit Suisse will benefit from ongoing reduced cost of innovation and faster time to market helping it gain greater competitive edge in the future.

A global Tier I futures commission merchant and FIS client for almost 20 years, Credit Suisse became the second client of the FIS Derivatives Utility when it migrated operations and technology staff and processing to the utility. With the addition of Credit Suisse, the utility now offers significant depth and expertise in cleared derivatives across an extensive worldwide operational footprint of more than 500 dedicated employees in nine cities and six countries across North America, Europe and Asia.

As the market continues to move toward more and more cleared products, Credit Suisse’s use of FIS services and technology will help ensure it can continue to deliver innovative solutions and products to its customers in the most efficient manner possible, while enhancing its ability to manage and control risk.

About the FIS Derivatives Utility

The FIS Derivatives Utility is a paradigm shift to drive significant scale efficiencies in the derivatives clearing industry through a multi-tenant operating model solution. The utility is a unique combination of people, process and technology that delivers these capabilities for futures, options and cleared OTC derivatives across nearly ever cleared market globally. It was designed to help global capital markets firms better adapt to market challenges by enabling market participants, including futures commission merchants (FCMs), to achieve greater efficiencies by leveraging economies of scale in middle- and back-office processing and technology. The utility provides clients with derivatives clearing operations and technology services for trade clearing, trade lifecycle management, margin processing, brokerage, reconciliation and data management.

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Leveraging the FIS Derivatives Utility will allow us to spread the cost of innovation amongst a larger group of firms by creating a standardized solution developed by the industry’s top experts.

John Dabbs, global head, Prime Derivatives Services, Credit Suisse




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