Newsletters
Confluentia endeavours to supply our clients
with periodic updates and insights relating
to project practices and issues, the market,
and financial technology.
Newsletter
Dear fellow professionals and friends
We hope that you have enjoyed some holiday rest, and that 2011 is already showing promise as a very positive year for you. Here at Confluentia we've had an excellent 12 months, and are already into the swing of a strong 2011.
Hot Topics: Clearing, Basel, and Optimization
The past three years have seen dramatic merger activity, and the various post-M&A integrations have now reached their closing stages at most major banks, at least to the point that the assets are now typically on the target bank's balance-sheet and that processes are adequately controlled-if not yet optimally efficient.
As harried executives come up for air, a few main types of initiatives are taking a lot of their attention:
- Initiatives that are regulatory mandates, notably Dodd-Frank, EMIR, and CRD
- Optimizing processes, reducing silos, eliminating duplication, and building scalable platforms.
Regulatory Mandates-Dodd-Frank, EMIR and CRD
Regarding regulatory mandates, much attention is focused on the implications of Dodd-Frank for derivative execution, clearing and reporting, and its corresponding EU mandate, the European Market Infrastructure Regulation (EMIR). And while the Basel III capital requirements will not be effective for several years, work is progressing in earnest at several banks on the Capital Requirements Directive (CRD) II and III amendments to Basel II.
Optimizing Processes and Scalable Platforms
Within the optimizing-processes category, major overhauls of the finance infrastructure are ongoing at a sizeable number of the major players, aiming at delivering a scalable, strategic architecture that supports finance processes on a common platform. A number of banks are performing similar overhauls on their risk and P&L infrastructure, as well as consolidation of their transaction or position data and reference-data for downstream processing within operations or elsewhere.
Confluentia expands with more complete offering
In the past year we have really brought our offering to Version 2.0 by hiring more great talent and delivering some first-rate projects, in the process building out our ability to help our clients across an even broader spectrum of financial products and functional areas. We've also worked incredibly hard on tuning our internal infrastructure to increase our efficiency, so that even more of our focus can be on delivering for our clients, knowing that the machine is working in the background. And we've also worked with an award-winning design firm to complete a redesign of our logo and a website overhaul, to ensure alignment between our capability and our image. We hope you like the results!
Among last year's highlights were the following:
- Added to our roster of prestigious top-tier global investment banks
- Continuously added headcount
- Doubled revenues
- Built out our development and support team in Lodz , Poland
- Consolidated our presence in the UK
- Made strategic Director-level hires
- Delivered projects across most asset classes: credit and credit derivatives, equity and equity derivatives, mortgage backed and asset backed securities, fixed income, money markets, and lending.
- Delivered (or delivering) projects across almost all functional groups: origination, sales, trading, market risk, credit risk, finance, product control, treasury, regulatory, compliance, and almost all areas of operations
- Helped drive initiatives to address topical questions, including Basel III, Dodd-Frank, and TRACE.
Confluentia's Charitable Contributions
We were also very proud that we again made good on our commitment to supporting charitable causes. Recipients included UNICEF, Oxfam, the World Resources Institute, and Amnesty International, among others. For more information on our giving please see our Charity page.
Economic Outlook- Green Infrastructure
While being upbeat at Confluentia regarding our growth and our prospects for 2011, we believe that there remain real concerns that the broader economy is not recovering as quickly as it could. Major companies are sitting on their cash, hesitant to commit it to increased production in the absence of foreseeable demand. That caution has led to a troubling paradox: US corporations recently had their most profitable quarter ever but employment did not decrease in the corresponding period. While fiscal responsibility is essential in the medium- and long-term, the current focus on austerity in world capitals runs counter to research into recession economics. In the authors' view, there still remains a need for stimulus, and with companies hoarding cash, someone else must assume the role of spender. US Treasury yields do not demonstrate that there are investor concerns about the US 's creditworthiness, at least not immediately, and thus there is a case that its government should continue to support the recovery. Spending on green infrastructure and energy would not just stimulate the economy short-term, thus immediately helping funnel dollars back into the tax coffers. The resulting infrastructure and technology would also lay a foundation for further boosting of the economy by catalyzing private-sector innovation into the future.
Carbon Markets
Turning to the carbon markets, while they have not gathered the momentum that participants had hoped for, key developments continue to occur. In the wake of the mixed results from the Copenhagen talks, including the introduction of a non-Kyoto framework, and the recent Republican congressional victory in the US , it appears unlikely that a robust US federal carbon cap-and-trade system will be implemented in the medium term. In the absence of strong international unity and US federal support, the past 12 months have seen an increased focus on regional initiatives and bilateral trading alliances. Regardless of the incentives or disincentives ultimately adopted to move our economies towards cleaner energy, we can only hope that the various strands of progress continue to gather momentum, and that a more unified and robust approach will prevail relatively soon.
About Confluentia
Confluentia is a premier consulting and technology firm. We provide teams of business analysts, project managers, and program managers to help our clients define and deliver their technology and process strategy. Our clients rank among the world's foremost investment banks, brokerage firms, and other financial services players.