CACEIS NEWS 39 EN

6 caceis news - No. 39 - September 2014

follow-up page 1

Proven teams and solid infrastructure

manage different files formats and the real time follow-up is becoming even more difficult. To address these issues, CACEIS tailor made services including mid- dle office engineering capabilities, in order to provide clients with a better expertise and cutting-edge IT systems able to manage larger volumes and innovative solutions. From a single account, clients bene- fit from full trades’ integration, fund valuations and custody reporting. This global platform is supported by client teams able to oversee all the middle office and back office opera- tional chain. Clients have access to a full range of services in order to improve risk management, to adjust to regulatory changes and to reduce administra- tive costs. Business Development Managers, backed by expert team, can provide clients with all the necessary infor- mation to assess their operational in- frastructure and offer dedicated pro- file setup in line with their needs

EXECUTION SERVICES ▷ Direct connectivity via FIX to worldwide regulated markets and Multi Trading Facilities. ▷ Futures & options, with the full range of underlyings: Fixed Income, Equities, Indices, Commodities and Forex. ▷ Cash Equities with comprehensive Algorithm libraries (VWAP, TWAP, etc.). ▷ Turnkey white-label solutions. ▷ Best Selection reporting suited to the growing fragmentation of markets, with an increasing regulatory pressure. CLEARING SERVICES ▷ Access to all worldwide Clearing houses for listed derivatives. ▷ Leading technology with robust software suites: CLEARVISION for Middle Office reconciliations with

HUBERT MONTCOUDIOL, Group Head of Prime Fund Solutions, CACEIS and MARC GIANNOCCARO, Head of Operating Line, Prime Fund Solutions, CACEIS

THE ADVANTAGES OF A SINGLE ACCESS POINT

The MiFID II Directive increases “pre trade - post trade” transparen- cy and all these changes will bring many challenges for the buy side, in terms of operational engineer- ing, capital optimisation, counter- party risk’s management, and new administrative costs. CACEIS’s integrated platform is designed to overcome these new challenges. CACEIS is a global clearing mem-

ber of all the European CCPs in- cluding LCH. Clearnet and Eurex Clearing, the two largest European clearing houses for listed deriva- tives and has applied to become OTC Clearing member. Such an integrated offer provides clients with a simplified processing model for listed and OTC derivatives and optimised collateral management services.

By diversifying the number of bro- kers on cash equity, futures and op- tions markets, asset managers gen- erate more complexity in their order flow management, more reconcilia- tion issues, larger margin call com- putations, more cash transfers and different reporting formats. In ad- dition, risk management tools can’t

Clearing houses; UBIX for trade positions and computation of collateral and margin calls.

▷ Integrated Execution management service for verification and payment of broker invoices. ▷ Regulatory Reporting to trade Repositories.

CACEIS helps its clients to optimise their SCR calculation and regulatory reporting before Solvency II comes into effect on 1 January 2016. Solvency II: enhanced look-through reporting

T he Solvency II directive aims to adjust capital requirements to the risks to which insurers, mutual groups and pension funds are exposed at European level. The mar- ket Solvency Capital Requirement (SCR) sets the amount of regulatory capital that these companies must hold for each asset class they invest in. One of the key features of Solvency II is the look-through principle: insur- ers, mutual groups and pension funds must provide a much more granular level of information on each of their investments whether direct or via a fund, including assets held by collec- tive investment vehicles. This will en-

able them to calibrate their SCR cal- culations and report to the regulatory authorities. OVERCOMING THE CHALLENGES OFA LOOK- THROUGHAPPROACH There are several pre-requisites to an effective look-through approach. The first challenge is that portfolio man- agement companies are understand- ably reluctant to disclose full details of their investment style for pooled vehicles, which could push insur- ance companies to invest in dedicated funds or discretionary management mandates. Another problem is that funds of funds put a barrier between the investor and the second level fund manager which makes it difficult to trace the underlying assets. Finally, it is difficult to get con- tract details regarding complex in- struments like OTC derivatives. However, Solvency II requires insur- ance companies to overcome these difficulties and obtain the appropriate data on their underlying investments in order to calculate their SCR, or to use a proxy enabling them to assess the risks. In this case, they could use the fund's benchmark or alternatively aggregate data by risk category (dura- tion, rating, etc.). A SINGLE CONTACT POINT Insurance companies invest in many funds managed by different portfolio management companies, which re- sults in multiple interactions and po- tentially different file formats to ob- tain the look-through data. CACEIS offers its clients a single contact point. Our dedicated teams retrieve full details of client positions and

the underlying assets, and can en- rich them upon request. As Europe's leading fund administrator, we have developed a data warehouse of unri- valled depth, we interface with other valuation agents and we source data, particularly on foreign funds, from specialist providers. CACEIS can therefore meet Solvency II require- ments regardless of the proportion of funds it administers. To facilitate the exchange of information between institutional investors and portfolio management companies, a standard has been created by CACEIS to cap- ture external holdings. If they are not available, we help our clients to de- fine an appropriate proxy. CACEIS has built a look-through ca- pability based on complete, accurate and reliable data. Prior to delivery the service is tested with the client. A quarterly look-through report is swiftly produced to enable our clients to calculate their SCR on a timely ba-

THIBAULT GUÉNÉE, Product Manager, CACEIS

sis, as well as control procedures in the form of reporting. This service which has been in place since 2011 for a broad range of funds, with vari- ous customers among them Crédit Agricole Assurances, successfully meets the challenge of providing standardised data obtained from nu- merous sources. Clients benefit from the advice of our experts, who are able to devise customised solutions, especially for proxies. An actuary experienced in Solvability II, asset/liability man-

agement and investments, presents the technical solution tailored to the needs of each client for the list of col- lective investment vehicles subject to look-through treatment. CACEIS can guarantee a sustainable quality of data as its expertise in this field is recognised by ISO 9001 and ISAE 3402-SSAE16 certification. Clients may also request information for cal- culation of sub-aggregates for market and counterparty SCR by relying on teams with experience in risk indi- cators (Var, stress testing) providing them with customised reports

Thibault Guénée

In April 2014, Thibault joined CACEIS to develop CACEIS’product offering dedicated to Institutional

Funds transparency

Level 0: Asset management portfolio - Level 1: securities held by funds level 0 - Level 2: securities held by funds level 1

clients: Insurers and Pension Funds. Thibault is a Fellow of the French Institute of Actuaries (2000) with CERA certification (2012). Before joining CACEIS, Thibault was senior consultant then director of Life Insurance Business at Towers Watson Paris where he led several projects on Solvency II, M&A, Modelling, MCEV review. He also gained a solid experience in Investment, ALM, Risk Management and Solvency II regulation through 11 years in Insurance Companies: SACRA and Le Conservateur.

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Level 0 Level 1 Level 2

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