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B-Case 1

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  1. 1. <ul><li>Chappuis Halder & Cie </li></ul><ul><li>CIB-Flow/Transaction banking </li></ul><ul><li>January 2010 </li></ul>
  2. 2. The global CIBs are gradually shifting to a client and flow trading business model … <ul><li>The strategic switch to flow business models reflect the impact of : </li></ul><ul><li>weaker macroeconomic conditions </li></ul><ul><li>continued market volatility </li></ul><ul><li>fundamental shifts in client demand away from more complex products </li></ul><ul><li>Current strategies can be resumed in the three choices below: </li></ul><ul><li>Shift gradually towards : more liquid products in areas such as algorithmic trading, cash equities, prime services, rates, foreign exchange, high grade credit and advisory businesses. </li></ul><ul><li>Reduce drastically : origination capacity in complex credit and structured product businesses and cut risk capital usage </li></ul><ul><li>Exit now : certain proprietary and principal trading operations </li></ul>
  3. 3. … . leading change for this major operational transformation means 5 key workstreams to launch ASAP Client Contribution Collateral Management Prime Brokerage & Prime clearing Client Services Key to segment client & identify opportunities Key to manage default risk of corporate counterparts especially in emerging markets Key to seduce the major asset managers and gain high volumes Key to retain the corporate client by offering outstanding level of services in addition to fair price Process streaming, controls & outsourcing Key to reduce costs and operational risk Client and flow trading business
  4. 4. Client Contribution, a crucial workstream for the flow business Client Contribution <ul><li>Price communication to client </li></ul><ul><li>Sales (yes) </li></ul><ul><li>Back-office (no) </li></ul>C-Level Reporting Bank internal use of CC <ul><li>Client vision, central for flow biz crosselling </li></ul><ul><li>Business line performance vision </li></ul>CC external use “client vision” Communication of prices to the Market (screens) <ul><li>Key issue: </li></ul><ul><li>Calculation methods </li></ul><ul><li>Ownership </li></ul><ul><li>Homogeneity </li></ul><ul><li>For both: </li></ul><ul><li>Capital Markets </li></ul><ul><li>Structured Finance </li></ul>Risk Reporting <ul><li>Input for cost of risk </li></ul><ul><li>Input for limits and concentration/country </li></ul><ul><li>Greenfields identification </li></ul><ul><li>Client segmentation </li></ul>Sales Reporting <ul><li>Level of client services adjustment </li></ul>Ops Reporting
  5. 5. Client Services, the key to efficient client and flow trading business model 6 Drivers of Client services 6 Key Success Factors <ul><li>Client categorisation </li></ul><ul><li>Single entry point </li></ul><ul><li>Service Level Agreements </li></ul><ul><li>Exceptions management processes </li></ul><ul><li>Workflow processes </li></ul><ul><li>Quality Monitoring Data & Reporting </li></ul>
  6. 6. Client Service best practice-Goldman Sachs <ul><ul><li>GS client’s have a dedicated Client Services account representative for each zone ( Americas, EMEA and Asia) which is the central point of contact with respect to : </li></ul></ul><ul><ul><li>global market access (RediPlus) </li></ul></ul><ul><ul><li>margin financing/collateral </li></ul></ul><ul><ul><li>trade settlement </li></ul></ul><ul><ul><li>asset servicing and accounting practices and policies </li></ul></ul><ul><ul><li>Hearsay reporting is a service whereby the prime broker aggregates external broker positions and balances into consolidated reports on behalf of its customer. </li></ul></ul><ul><ul><li>RediPlus is GS multi-product electronic trading platform. The system provides a complete front-to-back office technology solution and boasts pre-trade analytics, value-added execution services, algorithmic trading, portfolio trading solutions and post-trade analytics. The platform boasts robust risk analytics and performance measurement tools, real-time reporting and portfolio analytics and a customizable desktop display </li></ul></ul>Multi-broker platform Dedicated Client Services Account Representative <ul><ul><li>Hedge funds clients are clearly gravitating toward outsourced mid-to-back office processing </li></ul></ul><ul><ul><li>GS is targeting services such as cash management, daily settlement and reconciliation, collateral management, corporate actions processing, and portfolio reporting since they currently perform them as part of their existing internal processes. </li></ul></ul>Hearsay reporting Middle- and back-office outsourcing* Fund administration – independent NAV delivery * <ul><ul><li>Goldman Sachs offer complete fund administration including independent NAV delivery. The privacy issue is paramount since the fund administration side of the business must be kept separate from the prime brokerage side. Major investment banking firms currently provide this service either to preferred customers or only on assets held at the bank. </li></ul></ul>
  7. 7. Strategy of cutting edge prime brokers is to become both global broker and global prime clearer <ul><li>The objectives are triple : </li></ul><ul><li>Be the top player in the FCM Business </li></ul><ul><li>Become a driving force in the IDB field </li></ul><ul><li>Be among the best Primer Brokers </li></ul>PURE FCM Execution & clearing on listed options and futures GLOBAL BROKER Listed options & futures, Fx sport, fwd & options, some bonds and equities GLOBAL CLEARER Options & Futures Fx GLOBAL BROKER Listed options & futures, Fx sport, fwd & options, OTC derivatives, cash bonds & equities Voice and e-trading GLOBAL PRIME CLEARER Options & Futures Fx, OTC derivatives, cash bonds & equities Global market access Global clearing /settlement Trade processing Market commentary Capital introduction Financing leverage Start up services Asset Custody Securities Lending Global cross margining Reporting management Risk management