London, 9 September 2019 – Delta Capita, the international business and technology consulting and managed services firm, has today announced it is collaborating with The Depository Trust & Clearing Corporation (DTCC), the premier post-trade market infrastructure for the global financial services industry, to help market participants meet their Securities Financing Transactions Regulation (SFTR) trade reporting obligations.

Delta Capita’s banking consortium is creating a standardised SFTR industry test pack. Under this new collaboration, Delta Capita will make the test pack available to DTCC to test its own SFTR matching and reporting service prior to launch. DTCC opened user-acceptance testing with industry vendors on August 30, 2019.

Clients of DTCC’s Global Trade Repository (GTR) service for SFTR – who independently license the consortium’s test pack – will benefit from knowing the service has already been tested, reducing their own testing effort and costs and ensuring readiness for trade reporting. Furthermore, DTCC will make its data transformation services available to Delta Capita’s banking consortium to assist with the creation of trade repository (TR)-ready ISO 20022 SFTR reports.

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The IBOR transition is both an opportunity and a threat to every financial institution. The opportunity is that a clean, well-managed IBOR transformation will enable a firm to take advantage of the possibilities that arise from changing one of the foundations of current financial markets. The threat is that a poorly managed, lagging transition will at best cost a firm market share and at worst incur significant regulatory attention and intervention.

The FCA as lead regulator is making it clear that Friday December 31, 2021 (YE 2021) is the hard deadline for the end of LIBOR. Industry bodies (ISDA etc.) and working groups are currently finalising the new fallback and trigger provisions for each product to create a transition path away from IBOR. The current proposals differ significantly across products, countries, and timeframes and the transition from unified IBOR term rates to multiple differing solutions is creating many issues, some of which have yet to be identified due to the uncertainty involved.

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London, 4 July 2019 – Gary McClure has joined financial services professional services firm Delta Capita in its London office. The former HSBC executive will head Delta Capita’s KYC services business starting in September. 

“Gary’s industry experience in financial crime and KYC operations will provide the right leadership. We are very pleased that Gary is joining,” said Joe Channer, Delta Capita’s founder and chief executive.

McClure brings over 25 years of industry experience to the London-headquartered consultancy. Most recently, he was a Managing Director at HSBC, responsible for the global KYC operations function across investment, commercial and retail banking. Prior to that he headed up client onboarding at Barclays Capital and was an Executive Director in UBS’s global banking and markets operations business covering KYC and client data operations. McClure started his career in consulting at PwC, and later on also served Big Four rival KPMG prior to moving into banking.

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London, 2 July 2019 – Delta Capita, the international business & technology consulting and managed services firm, Pirum Systems and IHS Markit, announced today they will cooperate with an industry testing consortium to help firms meet the requirements of SFTR.

Delta Capita recently announced the creation of a consortium of banks to establish a standardised SFTR industry test pack. Under this new collaboration, Delta Capita will make the test pack available to IHS Markit and Pirum to support testing and provide feedback to the consortium.

Customers of the joint IHS Markit and Pirum SFTR solution who have independently licensed the consortium test pack will benefit from knowing the service has been reviewed by the SFTR solution providers, raising confidence in the service and potentially reducing their own testing effort and costs.

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In a recent article published in the Securities Lending Times SFTR 2019 Annual, Jonathan Adams (Managing Principal, Delta Capita) questions whether SFTR will ultimately deliver more efficiency and transparency to the securities finance market.

When the first Securities Financing Transactions Regulation regulatory technical standard (RTS) was released to market participants for consultation, it was met with dubious distain. Of the 153 fields, few could imagine how it would be possible to report more than 30 fields. Settlement matching had been on dates, security identifiers, counterparty information and economic terms.

It begs the question, how can a reporting regime of this complexity, fraught with the risk of matching failure, serve the regulator in determining the potential for systemic failure? Moreover, how can it benefit market participants?

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London and Frederick, MD, 18 June 2019 HighGear, a leading no-code workflow automation platform provider, today announced its strategic partnership with Delta Capita, the fastest growing financial services consultancy in Europe, to provide fintech and workflow automation solutions to the European financial services sector.

By combining the unprecedented speed of HighGear’s no-code workflow automation platform with Delta Capita’s business consulting, technology and managed services expertise, customers in the financial services, banking and insurance industries will be able to improve efficiency, streamline operations and accelerate digital transformation.

 

 

 

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London, 12th June 2019 – Delta Capita, the international Financial Services consulting and managed services firm, has appointed Emerson Boix to lead the Securities Financing Transactions Regulation (SFTR) Test Consortium technical implementation.  He will be based at Delta Capita’s global headquarters in Canary Wharf, London.

Emerson brings more than 20 years’ banking experience ranging from the design of collateralised repo obligations for Barclays Capital to operational experience across corporate actions, dividends, recalls and collateral re-use at Citibank.  Emerson most recently worked on securities finance projects, defining target operating models in preparation for BREXIT and performing SFTR impact assessments.  In the last decade Emerson has worked on almost all regulatory changes from Basel II, EMIR and MiFID I to a global implementation of MiFID II for Bank of America Merrill Lynch (BAML) as their regulatory subject matter expert.

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James Proudman, Executive Director for UK Deposit Takers Supervision at the Bank of England, spoke on 4th June at the FCA Conference of Governance in Banking about the implications of artificial intelligence (AI) and machine learning (ML) on governance in banking.

Proudman told the audience that the governance of AI adoption is “a topic of increased concern to prudential regulators” since “governance failings are the root cause of almost all prudential failures” and that managing the associated risks is an increasingly important strategic issue for boards of financial services firms.

While Proudman made sure to highlight the potential benefits of AI applications in areas such as securities trading, anti-money laundering (AML), fraud detection and credit risk assessments, he stressed that as a prudential regulator, the Bank of England has a need to understand “how the application of AI and ML within financial services is evolving”, the implications on the risks to firms’ “safety and soundness”, and in turn, how these risks can be mitigated through the banks’ internal governance, systems, and controls.

Speaking in reference to a survey of AI/ML adoption in finance currently being conducted by the Bank of England and the FCA, he stated that there is general agreement that although AI and ML can reduce risks, “some firms acknowledged that, incorrectly used, AI and ML techniques could give rise to new, complex risk types”.

Proudman suggested that the retrieval, processing, and use of data may pose a significant challenge, pointing to three potential causes of data-related risk:

  • the expanding scale of managing problems related to poor data quality as data availability and sources balloon,
  • ethical, legal, conduct, and reputational issues associated with the use of personal data, and
  • distortions resulting from biases in historical data and assumptions built into ML algorithms.

His insistence on the “the need to understand carefully the assumptions built into underlying algorithms” and “the need for a strong focus on understanding and explaining the outcomes generated by AI/ML” sends a clear signal to firms to incorporate ML explainability tools into their model development and validation workflow. Directly applied on a ML model, such tools allow modellers and testers to understand both why any individual decision was taken and how the inputs to a model interact to make it work the way it does as a whole. ML explainability tools can also be applied after AI/ML is approved for use. As Proudman notes, governance has a role to play during the deployment and evaluation stages as well as for correcting erroneous machine behaviour. To ensure proper oversight, a ‘human in the loop’ can make use of explainability tools to support their decision in favour or against shutting down an algorithm, for example.

Proudman further proposed that regulations designed to deal with human shortcomings, such as “poorly aligned incentives, responsibilities and remuneration” or “short-termism” remain as relevant in an AI/ML-centric work environment and that it will be crucial to ensure clear individual accountability for machine-driven actions and decisions.

The implication that individual employees, including senior management, may be held responsible for actions or decisions taken by a machine reinforces the case for facilitating human-friendly model explainability. Boards should think about how the right tools best enable their workforce to comprehend the reasons for, say, a rejected mortgage application, and whether the model that made that decision did so because of built-in human biases. Since the person responsible will not necessarily be proficient in the language of AI/ML, it is crucial that these tools facilitate human-friendly interpretations and, in turn, informed decision-making.

Proudman also affirmed that he sees increased execution risks arising from the acceleration in the rate of AI/ML adoption and proposed that boards should ensure that firms possess the skill sets and controls to deal with these risks.

Boards should heed Proudman’s call to align their governance structures with the challenges of AI/ML. In addition to the obvious benefits to the business, having knowledge of what the models are doing and being able to explain how they work may prove invaluable when it comes to anticipating new rules for transparency and interpretability requirements of ML models.

Other related issues, such as data privacy, also have implications for corporate governance which can be addressed using AI/ML tools. As an example, sending human voice data to the cloud through voice-activated mobile applications may expose users to risks of illegitimate data use and can cause distrust in a firms’ data practices. To avoid this, model compression tools can be applied to reduce the size of speech recognition models and consequently allow voice data to be processed locally so that they never leave the device.

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Alexander Klemm

Consultant

Delta Capita

London, 9th May 2019 – Delta Capita has formed an industry working group to mutualise the costs of preparing for the Securities Financing Transactions Regulation (SFTR).

As part of the preparations, Delta Capita held various workshops involving 50 repo, stock lending and testing experts to agree on a strategy for SFTR testing.

The working group includes prime brokers and agent lenders and is in active discussions with the industry trade associations, service providers and trade repositories.

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London, 11 April 2019 – Jan Scibor-Kaminski, formerly Managing Director of Euromoney’s Structured Retail Products business, has joined financial services consultancy Delta Capita as the firm’s Global Head of Sales. Scibor-Kaminski is based in Delta Capita’s London office. 

“We are very pleased that Jan is joining our executive management team. His industry experience will help build a world-class sales and account management organisation that provides a differentiating client engagement experience,” said Joe Channer, Delta Capita’s founder and chief executive.

Scibor-Kaminski brings more than 15 years of industry experience to the management and technology consulting firm. Previously, he was a Partner at Neudata, a data intelligence provider for the financial services industry, and Managing Director of Euromoney’s Structured Retail Products business – one of the fastest-growing businesses within its portfolio – for which he had full P&L responsibility. During his 6+ year tenure, Scibor-Kaminski led the unit’s growth into a multi-million turnover business and helped the firm position itself as a data and analytics leader for the structured products industry.

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