FX – Healthcheck

Operational Risk is the risk of direct or indirect loss from inadequate or failed internal procedures, people and systems.

 

The Foreign Exchange “Healthcheck” has been designed to uncover areas of Operational Risk within your business. You may think that you will notice these issues yourself, but in our experience it takes fresh eyes to look at the business objectively and thereby identify the problems. We can then help you to implement the solutions.

At a very high level, these should be your areas of concern ?

 

Before the trade

  • Know your customer
  • Documentation
  • Netting agreements
  • Collateral/Margin
  • Trading practices
  • Liquidity availability
  • System optimisation / TCA

During the trade

  • Trade capture
  • Trade entry
  • STP
  • Credit limits
  • Settlement instruction
  • Amendments
  • Dealt-rate check

After the trade (confirmations)

  • Timeliness
  • Security of messaging
  • Non-vanilla products
  • Confirmation matching
  • Exceptions & Escalation

Settling the trade

  • Settlement process
  • Nostro balance projections
  • Choice of nostro bank
  • Cancellation & Amendment
  • Payment failures
  • Settlement netting
  • Deadlines

Reconciling the cashflows

  • Timeliness
  • Identify non-receipts

Accounting for the trade

  • General Ledger issues
  • Daily position & P/L reconciliation
  • Daily position valuation
  • Review traded prices
  • Market data

Non-vanilla products

  • Option exercises
  • Barrier events
  • NDF fixings
  • Option premiums

Business Continuity Planning

  • Long term
  • Short term
  • Crisis team
  • Site testing

As you can see, there is a LOT of potential for failure, which can result in significant financial and reputational loss.

Please contact us for information on how Forex Consulting can help you with these issues.