Case Study

Genesis Fixed Income Trading Desk

Overview

A leading investment bank needed a trade capture and management solution to support its rapidly growing trading activities. The bank chose the Genesis System, by EXIS Consulting, as the foundation for building its solution.

The Company

The investment bank was an early player in trading emerging markets debt and since 1992 has grown their proprietary trading desk to volumes of over 1bn face amount per day. The desk has expanded into other asset classes including local currency equities and derivatives. The investment bank operations group confirms, matches and clears the trades for the desk.

The Problem

Firm-wide trade capture systems were not well-suited for trading emerging market debt as specific calculations for capitalizing or amortizing bonds were not supported. End user development of ad-hoc spreadsheets led to disparate data and key-man dependencies on operations staff for support. With volumes on the rise, multiple points of entry into multiple systems, and extensive spreadsheet use, operational procedures grew increasingly prone to critical errors.

The desk required a departmental solution to capture, store, audit, and process the daily trading and settlement activities of the proprietary trading desk. The system would need to consolidate trade entry into one system yet integrate with firm-wide accounting, compliance and risk systems in an automated fashion.

The Solution

EXIS Consulting was selected to deliver the Genesis System as the core application to manage the emerging market trading activities. Errors resulting from multiple system entry and spreadsheets have been greatly minimized and are now automated through implementing EXIS software and custom consultancy programming.

The Results

The investment bank can easily manage the trading operations with reduced operations staff while a larger trading desk can capitalize on trading opportunities. Straight-through-processing allows the operations group to channel time in resolving exceptions, instead of being hands-on for each trade. Real-time position, P/L, and risk management reports give traders an immediate snapshot of their book.

Fewer errors, increased trading volumes and greater transparency ensure the investment bank’s desk will continue to grow and expand into complementary business lines.

The Benefits of Genesis Trading Desk Manager

Objective	Benefits Achieved
Simple, rapid trade entry across all asset classes	Genesis offers a single ticket interface that defaults relevant information reducing input errors
Provide real-time calculations to monitor positions and P/L	Position, book value, market value, and P/L are updated in real time for trader analysis
On-line limit monitoring to alert risk managers immediately	Genesis views provide real-time credit and VaR calculations to assess exposure
Automated Mark to Market to evaluate performance	Interfaces with outside data vendors allow market prices, exchange rates, and curve information to be easily imported
Book trades from a trader book to a sales book with one trade	Genesis provides internal trading between strategies or portfolios allowing one internal trade to create the equal and opposite trade and link them together for future reporting
Allow traders to maintain multiple strategies or trading objectives	A flexible multi-tier structure allows for both strategy level reporting or desk-wide aggregate reporting
Provide single application for both Front Office and Operations	One unified application enforces single point of trade entry and allows immediate processing downstream by operations and accounting groups
Verify and Confirm trades quickly and easily	Genesis provides operations staff with printed confirmations, reports and online views that provide key trade related data including principal, interest and net consideration
Manage settlements and fails efficiently	DVP, FOP and partial settlements are flagged for the user indicating past, due, failed, or future. Cash and depot reporting provide both journals and ladders of movements
Provide comprehensive End of Day reporting	Management Reporting, Daily Activities, Audits and Event Ticklers can be batched together and run on daily timer. Any requested reports are stored internally within the system for later recall and review
Provide data feeds for downstream compliance systems	Genesis exports user-defined trade and position data, in multiple formats, for downstream firm-wide compliance systems
Auto create journal entries from trade tickets	The Genesis Accounting module automatically creates GL’s and performs EOD accruals, maturities, MTM and provides Balance Sheet, Trial Balance, and GL Entries reporting