As of March, a majority of buy-side firms were still not ready to centrally clear over-the-counter (OTC) derivatives, according to a poll by SimCorp, a Copenhagen-based software provider.
Only 41 percent of the nearly 60 executives from 34 global buy-side firms said their firms are ready to centrally clear interest rate swaps (IRS) and credit default swaps (CDS). More than half ─ 53 percent ─ said their firms were unprepared to do so.
Polls have consistently reflected similar results. Even as the June 10 deadline for Category 2 swap participants approaches, Tabb analyst Paul Rowady was not surprised by the SimCorp survey. "This is rooted in an overreliance on legacy and fragmented portfolio management systems which makes it difficult for firms to get the most basic information on the state of their business. Without the right technology in place, asset managers will continue to struggle, especially considering how OTC derivatives reform is only the first step in what will likely be a continuing overhaul of how firms address all securities and manage their exposures across an enterprise."
Respondents cited cost, collateral management, intraday reporting, systems integration and regulatory compliance as the biggest challenges in derivatives processing.
Anthony and James look at developments pertaining to the Consolidated Audit Trail and wonder if big-tech companies could challenge traditional asset managers.Subscribe to Weekly Wrap emails
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