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Sudhir Gupta
Director, Banking and Financial Practice Cognizant Technology Solutions
Deb Ghosh
Principal Architect, TIBCO Quantum Leap
Agenda
Introducing the TIBCO Event Fabric Predictive Trade Lifecycle Management
Growth of Trade Volumes and the Need to Reduce Cost Why do Trades Fail and Cost of a Fail Fail Management Process Trade Lifecycle Management using TIBCO Event Fabric Platform
Classic decision architectures however are sub-optimal in the ability to react in (near) real-time and handle the associated challenges of scale and availability TIBCO Event Fabric uses a unique high speed Event Correlation technology that
Significantly reduce latency and helps operationalize decision platforms in real-time Scales and performs significantly better than classical technology Non-intrusive, operated by business user, extremely quick time to production
Proven to have significant impact on Revenue growth, churn control, all risk based losses and revenue leakage etc
Closed Loop there is no easy way to take a full circle from the discovery to action Time to production a new insight takes a long time to put to production
Response Latency
TIBCO has perfected a technology that is in its 3rd generation now to solve this (and other similar) problems. The technology is called
Classic Fabric
Current Generation
Traditional Use-Cases
Account Opening Channel Integration
Transaction
Operations
Non Intrusive Events
TIBCO Event Fabric High performance Event Correlation Operational Data - Memory optimized images Business Situational Analysis Rules & Inference
Increase in cross border trades has added to the complexity of trade and settlement cycle
Possibility of these trades failing is higher due to higher number of intermediaries and additional parameters like time zones and exchange rates Higher chance of parties having incompatible views on the terms of a trade
in m illion
40 30 20 10 0 01 02 03 04 05 06 07
Year
Source: DTCC
Cross border holdings US - Rest of the world
Foreign stocks & bonds held by US Citizens US stocks & bonds held by rest of the world
Trading bonds and equities for customers is now a commodity business for Investments Banks, hence it has become imperative for them to cut costs in processing trades Estimates suggest more than a quarter of Wall Street institutions have a trade fail rate between15-20% Managing the cost of trade processing by effective fails management can be an important lever in controlling costs
in $ billion
Cost of a Fail
Seller loses the time value of the invoice price over the interval of the fail A fail exposes both the buyer and the seller to replacement cost risk
The buyer faces the risk that the seller becomes insolvent before settlement and that the price of the security increases prior to the sellers insolvency The seller faces the risk that the buyer becomes insolvent and that the price of the security declines prior to the buyers insolvency
Prospect of a fail drive the participants to devote resources to monitoring and controlling of counterparty exposure and could, in an extreme case, lead them to limit their secondary-market trading
Some of these nuances are more pronounced in case of cross border trades
As number intermediaries involved increases so does the probability of incompatible views on assumptions and practices involving the settlement mechanism and timing Differences can be on applicable costs, taxes, risk appropriation etc
What-If?
We can detect trades that are at the highest risk of failure and as they move in the life-cycle we can continuously and in real-time predict the probability of a break BEFORE it actually breaks?
We introduce a unique solution platform to address that goal a Predictive Trade Lifecycle Management Platform powered by TIBCO Event Fabric
Trades thus identified are instantiated in memory - they become part of the state machine
Trades in state machine/ memory are monitored This would be a a subset of all trades
Traditional flow vs. CEP solution based on TIBCO Event Fabric Platform
Solution Architecture
Conceptual Architecture
Situation Designer Exception Resolver Visual Analytics
Event Grid
Ref Data
Historical
STP (Existing)
Solution Architecture
Key Differentiators
Traditional solutions in this space are reactive with latency sometimes having a significant down-side on bottom-line
TIBCO Event Fabric Platform based solution is a pro-active PREDICTIVE solution Actions initiated in advance can alter the outcome for better having
The granularity of treatment is event and not just data This solution provides the ability to co-relate asynchronous events with historical data in real-time to predict likely events
Ordinary rules engine falls short
Thank You