Commerzbank to Give Front Office Increased Responsibility for Counterparty Data

LONDON—Frankfurt-based Commerzbank has changed its counterparty data operations, moving more responsibility from compliance to the front office, according to a panellist at the European Financial Information Summit in London in October.

Increased focus on regulation and Know Your Customer (KYC) resulted in the bank changing its account-opening process, giving more data work to the front office to ensure sales people have relevant details about their clients. Previously, the front office asked compliance to open an account and filter basic information for the team to verify.

With the new process, sales people can no longer pass customer-related documents directly to compliance, but they are advised to read documents and pull out essential information. Commerzbank still has a back-office team that verifies the answers provided by the front office, and will revert if there are any queries or if the front office has not provided the correct documentation.

"It's all very well that compliance knows the customer, but the guys who deal with the customer day in and day out need to know that information," said Denis O'Connor, London-based senior compliance executive, Commerzbank.

Moving the KYC process to the front office was a decision supported by the management. The person who gets the bonus from the trade should be the one who knows the client, according to O'Connor.

Ken Price, Canada-based chief executive of counterparty data verification firm Avox, suggested front office professionals are "fairly expensive resources" with a "fairly short attention span. I guess they will probably hire data clerks to do it," he commented. O'Connor admitted that traders will not want to manage the data and "we fully expect them to delegate that task to their desk assistant."

The new process has been rolled out in London, Frankfurt and New York. "We intend to roll it out to other international branches in the next six months or so," he said.

Meanwhile, other panellists said data sourcing remained a back-office function. Richard Snookes, London-based director, operations at Barclays Capital, said the front office is responsible for the client relationship, including understanding the client, why they want to trade with BarCap and why they want to trade that particular product, but "we don't expect them to go and source that information."

Still, Barclays Capital is also in the process of changing its request system. "One of the problems we've found is that at the front end, the ethos has very much been in the past that the salesman needs to get the name of the client in and that's pretty much it," said Snookes.

From a regulatory perspective, he said that he thinks regulators are looking for robust procedures to updating records.

Tine Thoresen