Download a complimentary copy of Celent's latest report FRTB and the Upcoming Renaissance in Market Risk Management compliments of Numerix.

Below you'll find a detailed summary highlighting key points from Celent's research that make this report of vital importance:

With an end-of-2019 deadline, FRTB is expected to be significant in terms of increases in capital, granular risk measures, more stringent modeling methodologies, and stronger operational controls.

Celent anticipates implementation costs are likely to be $60 million to $150 million for a Tier 1 bank over the next three years. Outside larger institutions, Tier 2 and regional banks are embarking on structuring their FRTB programs and mobilizing the necessary resources to assess what it means for them. From a solutions standpoint there are complex interdependencies to consider. If not implemented correctly, what typically happens is that a firm’s application landscape translates into overlapping systems interfaces, along with complex application and data dependencies and costly change management issues.

To improve this, firms must make key decisions regarding boundaries of functionality between front office, risk, market data, and product control — with considerations given to operational configurations on data centralization and ownership, governance of development lifecycle, controls, and levels of standardization.

Celent points out that siloed, black box, and loosely coordinated approaches that are typically used to underpin architectural foundations for front office, risk management, and finance operations will be increasingly costly to maintain and no longer fit for purpose. However, through centralizing and standardizing pricing and valuation activities to deliver common product/contract conventions, analytical components, data, and production processes in a factory-like manner, for instance, through a pricing library framework could serve as a basis for transformation.

“IT foundations and business capabilities built in the course of addressing and complying with FRTB requirements will set the stage for next-generation capabilities for market risk management in the decade to come.” – Cubillas Ding, Research Director for CelentFigure 1: Deciding Your Firm’s Architectural Strategy

 

 

 

 

 

 

 

This 30-page Report provides an examination of:

  • The new FRTB market risk imperative
  • IT Ecosystems: Impact of FRTB on trading processes and operating models
  • Formulating a Strategic Roadmap: Implementing a fit-for-purpose FRTB enabled stack
  • Vendor landscape and functional coverage

About Celent

Celent is a research and consulting firm focused on the application of information technology in the global financial services industry. The firm has two basic offerings: Research, providing members with continuous knowledge and advice, and Consulting, working with clients on specific strategy issues. Celent's analyst team is organized by financial services industry vertical: Banking, Securities & Investments, as well as Insurance. These analysts produce monthly research reports for our members, and are available to members to further explore issues and questions that may arise. This direct access to Celent's analysts means that members can immediately contact established experts on a large variety of issues within financial services technology. With its team of internationally experienced and multi-lingual analysts, Celent is able to provide its clients with global perspective.

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