We think you have liked this presentation. If you wish to download it, please recommend it to your friends in any social system. Share buttons are a little bit lower. Thank you!
Presentation is loading. Please wait.
Published byJonathan Wooley
Modified over 2 years ago
Z/Yen Limited Risk/Reward Managers 5-7 St Helens Place London EC3A 6AU United Kingdom tel: +44 (20) © Z/Yen Limited Cost per Trade Benchmarking OTC Derivatives 2005 A summary of the costs and relative efficiencies of 15 major banks in the processing of OTC Derivatives Transactions: Interest Rate Derivatives Credit Derivatives Equity Derivatives
© Z/Yen Limited Key 2005 Findings The rise in trade volume for Equity and Credit Derivatives has led to big reductions in the Cost per Trade. However, processing costs for more traditional products, such as Interest Rate Derivatives, have remained static. For Credit Derivatives, the Cost per Trade reduced from $401 to $233; For Equity Derivatives, the Cost per Trade reduced from $385 to $220. However, for Interest Rate Derivatives, the trend was reversed with the Cost per Trade rising from $181 to $209. At the same time, it is clear that demand for staff has increased and this has brought a significant rise in the Cost per Head. The average fully loaded Operations Cost per Head has risen from $123,000 to $133,000 per annum. This is fairly consistent across all products, though there is a small premium for Credit Derivatives staff. Within Operations, the confirmation process is still the highest area of cost, particularly for Interest Rate and Credit Derivatives with several banks spending over $100 on each trade against an average of $40 to $60.
© Z/Yen Limited Introduction and Survey Scope Participants 15 major Global/European Banks Products Interest Rate Derivatives Credit Derivatives Equity Derivatives Functions and Activities Costs – Operations, IT, CLS Headcount at a detailed activity level Trade Volumes Key Benchmarks Cost per Trade Cost per Head Operational Throughput (Trade Volume Processed per Head) Economy of Scale (Cost per Trade Relative to Trade Volume) Activity Costs
© Z/Yen Limited Cost per Trade Year on Year Trends For Interest rate Derivatives, static volumes and the rise in the Cost per Head have contributed to a rise in the Cost per Trade For Credit and Equity Derivatives, a rise in volume together with increased usage of industry utilities and better technology has driven a rise in Operational Throughput and thus a reduction in the Cost per Trade.
© Z/Yen Limited Economy of Scale Trends Cost per Trade against Volume For Vanilla Equity Options, the graph above shows that significant economies of scale have been achieved by the higher volume banks. For IR and Credit products, however, the slope of the curves is flatter indicating that smaller, treasury focused banks can be just as efficient as the major players.
© Z/Yen Limited Convergence of Processing Efficiency In previous years, Vanilla Interest Rate products have always been processed at a far higher Operational Throughput than other 'flow' products. However, in 2004 the pattern changed with both Credit Default Swaps and Vanilla Equity Options being processed with vastly increased Operational Throughput. In 2004, the trade volume processed per head was actually higher for Equity Options than Interest Rate Swaps.
© Z/Yen Limited Operations IT Support Costs IT Support costs per trade have fallen across all products between 2003 and This is despite the gains in efficiency achieved by the corresponding Operations groups which are often attributed to IT improvements. In a similar pattern to the Operations groups, unit costs for IT support have reduced most significantly for the Credit and Equity OTC products where volume growth has been the highest.
© Z/Yen Limited Z/Yen Projects Confirmed/Planned Cost per Trade Benchmarking Operational Performance of Brokers Operations Best Practice Settlement and Custody Fees Corporate Actions Brokerage Costs Relocation Analysis European Securities US Securities Global FX/MM Global OTC Derivatives European Clients US Clients FX/MM Global Clients (2005/6) OTC Derivatives Global Clients Asian Clients Securities (Eq. / FI) Commodities Corporate Loans IM Admin. Costs IM Operational Performance
Z/Yen Limited Risk/Reward Managers 5-7 St Helens Place London EC3A 6AU United Kingdom tel: +44 (20) © Z/Yen Limited Jeremy Smith Giles Wright James Pitcher
Z/Yen Limited Risk/Reward Managers 5-7 St Helen’s Place London EC3A 6AU United Kingdom tel: +44 (20) © Z/Yen Limited 2005 Z/Yen.
JSC Operations Managers Conference Goldman Sachs view of CLS Experience and Expectation Frank Smith London 21 st April 2005.
Harnessing the Network of Banking Intelligence Misys Treasury & Capital Markets Streamlining Treasury & Capital Markets operations for competitive advantage.
DTCC Confidential DTCC Deriv/SERV Trade Information Warehouse.
Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall 9-1 International Business Environments & Operations 14e Daniels ● Radebaugh ● Sullivan.
London 25 September 2008 Measuring the Risk Free Rate in the UK Regulatory Context Water UK Cost of Capital Seminar 2008 Dr Richard Hern Tomas Haug.
London, National Foreign Exchange Association, Russia1 Russian Rates derivatives volumes Dmitry Piskulov, Ph.D. (econ.) Chairman of NFEA Management.
DTCC Deriv/SERV ACSDA Leadership Forum Michael Velleca, Vice President, Deriv/Serv October 8, 2007.
London Stock Exchange Interim Results 11 November 2004.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill /Irwin Chapter One Introduction.
The role of debt policy in the development of a derivatives market Fifth annual OECD-World Bank Bond Market Forum June 2-3, 2003 Thomas Olofsson, Head.
Good case practices in lending and loan portfolio management Milan Dobeš Conference on Lending Standards January 31 st, 2014.
Trading Telecoms Bandwidth in Asia: A demonstration and explanation Paula Brillson, founder & Managing Director Hong Kong, 24 June 1999.
Analyst & Investor Meeting Wholesale Clients SBU Wilco Jiskoot - Member of the Managing Board (Chairman of WCS) 11 December, 2003.
Rates Markets Graham Bird, MD - Global Head of Rates Markets 11 December 2003.
1 ISDA presentation at Gretai Securities Market International Bond Market Conference 2009 Jeffrey Kan Operations Director, Asia Pacific November 20, 2009.
An open highway to triparty Euroclear Collateral Conference May 2015.
...empowering Mortgage Brokers ‘an introductory presentation’
Local Capital Markets Emerging Market Investment Opportunities Executive Summary Local Capital Markets Emerging Market Investment Opportunities Executive.
BCP: Emerging Themes for Custodians Giles Elliott SVP, Head of Business Development & Support HSBC Securities Services, Hong Kong.
6 th International Conference “Russian Rates Derivatives 2012: New Environment?” Location: EBRD, Russia Nat FX Association, ISDA Organisers: London, European.
6 th International Venture Capital Forum Athens 14 th -15 th June 2005 Private Equity in Europe -Fund Raising and Trends.
1 Economic Research Department 1The New International Financial Map for LAC Alicia García-Herrero Chief Economist Emerging Markets Economic Research Department,
Consumers at the Endpoint of Liberalisation: An Analysis of UK Gas Prices Professor Philip Wright FEI The University of Sheffield 4ème Colloque.
JJ Mois Année Recent market trends RUSSIA June 2009 Wider. Closer. Simpler.
EWEC 2007 Milano Drs. J.P. Coelingh, senior consultant Wind and power derivatives in project financing.
REIU (Regional Economic Intelligence Unit) Patrick Bowes Regional Economic Intelligence Unit.
International Financial Markets and Instruments: An Introduction Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
Comments from Instructor: A detailed yet analytical paper, which puts class materials into good application, and takes one step further, if simple, to.
February 7, 2000 Mumbai Using Derivatives in India - A Snapshot February 7, 2000.
1 Cross Border Financial Positions and Exposures Juan Pablo Graf Banco de México.
© 2004 South-Western Publishing 1 Chapter 13 Swaps and Interest Rate Options.
Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill /Irwin Chapter One Introduction.
Derivatives Markets The 600 Trillion Dollar Market.
0 Preliminary Results FY June Highlights & Key Issues Operating Performance Full Financial Performance Outlook & Strategy AGENDA.
Copyright © 2009 Pearson Education, Inc. publishing as Prentice Hall 9-1 Part Four World Financial Environment Chapter Nine Global Foreign Exchange And.
Copyright © 2015 Pearson Education, Inc.8-1 International Business Environments & Operations 15e Daniels ● Radebaugh ● Sullivan.
+ OTC Derivative Clearing Summary Making Great Ideas Become Reality”
Ship Finance ‘Opportunities and Challenges’ Andy Georgiou Head of Global Shipping Coverage 24 th June 2015 Efficient Shipping Finance; The Seminar.
O C T O B E R 2 2, T H I R D Q U A R T E R Financial results.
Introduction To Credit Derivatives Stephen P. D Arcy and Xinyan Zhao.
Industry Research Prepared by: Angus Christina Crystal Henry Rita Sally.
Daily Settlement Transition Overview NGX Power Product Suite October 2010.
Banking Risks and Regulation. Changes in Indian Banking.
Chapter 15 Tools of Monetary Policy. Demand for Reserves Quantity Demanded for Excess Reserves ( ) provide banks with insurance against big withdrawals.
Total Quality, Competitive Advantage, and Strategic Management.
Financial Markets. Saving and Capital Formation Saving money makes economic growth possible One’s person savings can represent another person’s loan Savings.
Food Bites Confectionery Bars Snacks and Confectionery Annual Market Quantification March 2011.
Revise Lecture 9. Q1: What is capital market? Revise Lecture 9 Q2: What is primary and secondary markets?
© 2017 SlidePlayer.com Inc. All rights reserved.