Uni Systems can now provide Vector Risk's Trading Book Market & Credit Risk Solution to its customers, using Finastra's FusionFabric.cloud and hosted on Microsoft Azure, enabling cloud-based automation of credit and market risk calculations in the trading book.
The Fundamental Review of the Trading Book (FRTB) is a comprehensive set of guidelines established by the Basel Committee on Banking Supervision (BCBS) that capital banks must follow in order to protect themselves against market risk exposures. It broadens the present market risk framework to guarantee that internal models used by banks to compute capital needs handle risks effectively, and it simplifies comparisons of risk-based capital ratios across banks.
By collaborating with Uni Systems and delivering Vector Risk's solution through Finastra's platform, more banks will benefit from continual updates and regulatory compliance more rapidly, with lower project risk, and without the need for new IT infrastructure.Trading Book Market & Credit Risk is a SaaS solution that connects to Finastra's treasury and capital market solutions, common market data packages, and institutions' own data right out of the box. It automates the standardised approach for counterparty credit risk (SA-CCR), Value at Risk (VaR), Possible Future Exposure (PFE), credit valuation adjustment (CVA), and others that will be included in the future. Uni Systems is responsible for strategic direction, project management, and technical execution.
Most banks made little headway in planning for the FRTB for several years as the BCBS pushed back the implementation deadline, leaving several major implementation issues mostly unsolved. Most of the recent preliminary work has been on establishing the appropriate risk infrastructure as well as increasing data quality and collection. The most difficult issues of the new framework for IMA banks include passing the P&L attribution (PLA) test and the capital costs that would result if exposures are recognised by the non-modellable risk factor (NMRF). These problems have remained critical in banks' cost-benefit analyses of desk structure decisions.
Several banks have already begun preliminary conversations with their regulators about seeking approval to employ IMA models, notably in the EU, where the CRR2 reporting structure offers a foundation for doing so. More broadly, some FRTB work is being postponed owing to persistent regulatory uncertainties, notably in the EU.
Finastra, a global provider of financial software applications and marketplaces, provides institutions of all sizes with a wide range of solutions and services in areas such as lending, treasury, capital markets, retail, digital banking, commercial banking, and payments.
Finastra has been on a roll in terms of collaborations. It began its cooperation with Veem in December 2022 to enable business payments through native integration with Finastra's Fusion Digital Banking Platform. The collaboration between Veem and Finastra enables banks and other financial institutions to provide new payment services for small and medium-sized businesses (SMBs) by using automated electronic invoicing and bill-pay capabilities.
Eventually, in January 2023, XPAY chose Finastra to assist with its expansion objectives. Finastra's Fusion Essence will already be connected with the company's payment processors and Salt Edge's Open Banking Compliance.
Lastly, in February 2023, Finastra joined Integro Technologies to deliver digitalisation and exposure risk products for clients. With this agreement, Finastra will supply customers with its Trade Innovation solutions, coupled with Integro's SmartLender Trade Limits service.
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