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Transcript of Derivatives
Want to learn more about
here at Capco?
Innovation in Action
InnAct: Vision & Objectives
Vision & Objectives
Huge amount of information available & fast rate of change across the industry
Need to structure our collective experience and thoughts in an efficient manner
Derivatives: What do we mean?
A derivative is a financial instrument that DERIVES its value based on the value or performance of some underlying asset, instrument or
General Derivatives Categories
contracts between 2 parties to buy or sell an asset at a specified future time at a price agreed upon today
contracts obligating the buyer to purchase an asset (or the seller to sell an asset) at a predetermined future date and price.
contracts which give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified strike price on or before a specified date.
contracts in which two counterparties exchange cash flows of one party's financial instrument for those of the other party's financial instrument.
Market Night InnAct - Derivatives
Improve efforts to be contributors to industry discussion & fuel our ability to create differentiated solutions
Need to form communities aligned with area of interest
Innovation in Action
Capco's real-time thought leadership and Community Development Initiative
Dynamic thought leadership
Give our brand a voice, drive innovation, & increase sales opportunities
Schedule delivery of Blogs
Coordinate internal and external communication
Create marketable, commercial solutions relevant to our clients
Partner with FIS for offerings
Creation of online video series by our Subject Matter Experts
Coordinate catalog of project artifacts, pitches.
Develop catalog of vendor landscape related to derivatives
Monthly blogs that give a
on a topic of choice within the Derivatives space
Act as a platform for providing constant
about the activities of the community and its members
Actively involve the Capco community by
engaging everyone to blog
about their experiences related to Derivatives, whether they are business or regulatory driven
The blogs will discuss a
current trend or topic and its impact
on our clients from a perspective where Capco can add value
The general tempo of the blog will be light hearted, but provide
to the audience.
will be constantly monitored to define the direction of future blog posts and hence the community.
Carry out the As-is analysis
List the number of derivative projects handled by Capco currently and in the past
Subject Matter Expert resumes
requests for proposal
, and project
Carry out extensive
and develop understanding on the vendor situation
Map the solutions
on the derivative trade life cycle
for further discussion
impact of regulations
on the vendor solutions
Carry out the high level
cost benefit analysis
on the vendor solutions
Analyze the possible fitment with Capco and its clients
Higher capital requirements, simplified legal structures, shrinking spreads, cost of regulatory burden and overall market volatility are just some of the
investment banking participants face in this new era.
The Solutions work stream is looking to do an analysis of Capco’s capabilities and to a build-out a
framework for a portfolio of standardized
, marketable solutions it can bring to our clients in the form of tools and accelerators.
To develop derivative solutions that cater to the current and future
client needs by managing assets, generating demand and measuring results
Reinvent the solutions
continuously to be always in demand
What do investors do with Derivatives?
Hedging/Managing a Risk
that is unwanted
Airlines use derivatives to
MANAGE THEIR EXPOSURE
to the price of oil
Derivatives often have a great deal of built in
Allows you to find opportunities for
Standard "Capital Markets" jargon applies:
buy/sell, long/short, bought/wrote
How do Capco's clients interact with Derivatives?
Makes profits from the difference between the
BID AND ASK
between buyer and seller (commission)
between client and their counterparties (fee)
Bilateral vs Cleared:
Bilateral exposures have significant infrastructure around
FCMs are the interface to
which provides a way for derivatives traders to limit counterparty risk
Derivatives Reg Reporting
Derivatives Platform Migration
Markets & Product Integration
for Listed and OTC Cleared Derivatives
Cross Product Portfolio Margin
across Listed and OTC Derivatives
Swaps Data Repository (SDR)
Collateral and Trade Capture Renovation across Bilateral and Cleared Derivatives
Correction of v
aluation model for Equity Options
to calculate FX exposure of trade positions for Regulatory Reporting.
impact of new regulations
in Mexico on Swaps trade reporting.
of the reporting of Equity Forwards and Options with the new regulations in Mexico
for PWM Clients
Perform margining, collateral management, portfolio accounting and performance
Options and futures
used to manually feed these trades into GMI
With this process being automated, BAML can now be much more
when executing future/option trades
Current & Recent Derivatives Projects
Contact us at
Coordination between L&D and Derivatives Community
Close skills gap
Continuously monitor Capco’s
in the Derivatives space