FINsights: Navigating mergers and mitigating risks in securities

Securities operations

Financial services firms need to address challenges in their operations, including post-merger IT integration, reducing cost of operations and technology, and managing risk. The current issue of FINsights focuses on securities operations. We evaluate emerging trends and strategies in the middle- and back-office infrastructure of firms in the securities industry. Our experts share insights into managing client risk, creating an enterprise risk view for investment banks, and leveraging existing anti-money laundering (AML) infrastructure to mitigate rogue trading risks.

Strategic IT cost reduction: Doing more with less
By Anita Ballaney, Michael Gavigan, and Vishwanath Shenoy

The current economic climate will force financial services companies to examine their cost structures. Their IT costs constitute a higher percentage of the revenue compared to other industries. CIOs will have mandates to do more with less within aggressive timeframes. By taking an enterprise-wide and a holistic approach, CIOs must examine IT spend and prioritize opportunities for IT cost reduction to successfully meet their objectives.


Investment banking transformation into a bank holding company
By Karthik Balasubaramanian, Nikhil Bhindgarde, and Pankaj Kumar Sharma

With the current liquidity crisis and falling asset prices, many non-banking enterprises are considering converting themselves into bank holding companies (BHC). Under US regulations, non-banking enterprises need BHC structure to coexist with a deposit-taking bank. The BHC or financial holding company (FHC) structure and the banking charters present new opportunities and challenges for non-banking enterprises.


Post-merger integration: Best practices for information technology mergers and integrations
By Greg Root and Jim Shand

Mergers in the US and European financial services industry will take place in an effort to stabilize the securities sector. In such a merger and integration (M&I), the business expects synergy – the business value from the two companies should be greater than their individual effects. These synergies typically include increased market share, reduced operating costs, and the ability to enter new markets. The key to achieving these synergies is the successful integration of the information technology processes of the merged companies.


Alternative investments: Leveraging event-based processing for real-time information
By Muthukumar Krishnan and Prashant Gupta

Our white paper analyses how event-based processing plays a key role in providing real-time information to various users in the alternative investments industry. It makes a case for real-time information, identifies challenges, and discusses event-based processing and its usage to ensure real-time information availability to decision-makers in the industry.


Securities operations: Operating model best practices
By Richard Gerry, Venkatesh V, and Sanjai Taneja

Our article focuses on the best practices for a securities firm while creating a future state best-in-class operating model across strategic and operational dimensions. Infosys helps leading securities firms and investment banks restructure their operating model. We have conducted primary and secondary research on securities firms to understand how their businesses are organized and how their operating models work. This helps in identifying behavior patterns across trading and client relationship teams, operations, and technology support.


Maximizing the impact of business transformation
By Geetha Bellu and Arun Vasu Nair

Business transformation becomes an imperative in hard times when the only option for financial firms is to swim or sink. Our article sheds light on business transformation for maximum impact, with a special focus on securities operations.


Processing corporate actions: A continuing challenge
By Omesh Sundaramguru and Roy Antony

Financial services firms have invested millions of dollars to automate the corporate actions process. However, the risk quotient of the process hasn’t changed significantly. Our article discusses the challenges and risks in the corporate actions process, the impact it has on other fund administration, back office processes, and recommendations for mitigating risks in the process.


Securities processing: Evolution and trends in exception management
By Navin Shankar Patel and Rajesh Subbarao

Securities firms have achieved a high degree of straight-through processing (STP) for key business processes. It has helped them improve efficiencies and lower operational risk. However, a small but significant percentage of exceptions continue to occur, requiring manual intervention. Delayed or incorrect handling of these exceptions poses an operational risk. Managers realize that efficiency in exception management impacts the overall efficiencies of operations.


Trends in clearing and settlement in Europe
By Hari Shankar Gupta and Praveen Daga

In the European Union (EU), the clearing and settlement industry is undergoing consolidation. Organizations are seeking ways to achieve unified procedures and economies of scale for process efficiency and cost reduction. Our article discusses the emerging trends in the clearing and settlement industry, and the challenges and technological advancements.


Offering-managed products: Challenges in the middle- and back-office
By Yogesh Mishra and Dilip Karadge

The managed products industry is growing exponentially. Operational procedures for servicing managed products are evolving and sponsors face challenges from rigid legacy systems, redundant processes, and a changing business environment. Strategic transformational changes are required in the industry to capitalize on opportunities.


Mitigating rogue trading risks by leveraging your investments in AML
By Satnam Pal Singh Gill and Uttam Purushottam

Financial firms often modify internal controls to address weaknesses in the management of trading risk. However, modifying internal controls without augmenting the supporting infrastructure will not suffice. Financial institutions can leverage the experience and assets of their anti-money laundering (AML) compliance program to mitigate the risk of rogue trading. Our article discusses ways to efficiently reuse the infrastructure created for AML and trade compliance to deal with rogue trading risks.


Creating an enterprise risk view for the new-age investment bank
By Vinayak Shanbhag and Thadi Murali

Investment banking has changed after the consolidation of investment banks with commercial banks and the Fed's conversion of others into bank holding companies. Wall Street, as we know, will cease to exist and investment banks will be subjected to increased regulation. Our article explores the impact of increased regulation from a risk management perspective. It argues for more synergies in risk management between investment and commercial banking functions. It also discusses the challenges and imperatives in creating an integrated risk view.


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