Infrastructure readiness for swaps clearing

Abstract

Moving to a cleared swap environment required taking a ‘learning by doing’ approach, which adds particular challenges to asset management firms that must operate as a client fiduciary and not take undue operational risk. Waiting until all the requirements were clear, however, presented a different set of risks. AllianceBernstein began their programme in early 2012 and took an incremental approach to the challenge. By beginning with test trades and investigating how to make sure all the pieces needed to be connected, the company felt comfortable putting on some small live trades and then building towards a more industrial-strength approach. Now it is necessary to move to the next phase of complexity, moving beyond the simple capability of handling cleared trades and towards greater optimisation of portfolio management and margin management.