Hexaware - Capital Market Middle Office Capabilities

Services for

Middle Office

www.hexaware.com

Asset Management &

Capital Markets

© Hexaware Technologies Limited. All rights reserved. www.hexaware.com

Services for

Middle Office

Introduction

Hexaware offers a complete range of Asset Management Solutions for Global Financial Institutions, Fund Managers, Investment

Managers, Institutional Asset Managers, Mutual Fund Managers and Insurance Money Managers.

Hexaware has around 100 professionals with deep and extensive domain knowledge in various business lines of Middle Office

space. We deliver end-to-end solutions combining technology and a deep understanding of the business with expertise in Risk

Management, Compliance, Reconciliation, Position Management, and P&L Allocation.

Our solutions are precisely aligned to our clients‟ specific context and requirements to ensure an integrated experience presented

from a common front that addresses the business need. Our resources worked in leading Risk Management Products and

Reconciliation products such as Eagle, TLM. In addition, our dedicated Asset Management & Capital Markets team leverages

technical expertise from our technology teams covering JEE, Microsoft Dot Net, Mainframe and ERP.

Hexaware provide solutions in the following areas:

Risk Management, Compliance Reconciliation, Position Management, and P&L Allocation.

Hexaware’s solution for Asset Management & Capital Markets Clients:


Services for

Middle Office

Middle Office Expertise

Hexaware has a strong domain & technical experts working with Global Investment Managers in Middle Office

Functions. The team brings rich experience in Middle office functions like Risk Management, P&L Calculation and

Position Management.

Need for Risk Management

Due to global market participation and regulatory changes, Risk Management plays vital role in managing the liquidity for Asset

Management Companies. Listed below are some of the emerging trends in the Risk Management.

Increased market volatility – Are measures like VaR sufficient?

Exposure to credit risk increased manifold for asset managers/hedge funds

Increased focus on liquidity risk assessment and measurement

High focus on counterparty risk

Model development/ Model validation

Scenario analysis and stress testing

Business & Risk Decisions – Moving away from steady state

Stress testing

High focus on operational risk and compliance risk

Compliance with UCITS III/IV

Enterprise wide view of risk – risk attribution with performance attribution

Increased focus on data management/ appropriate dashboards

Risk Management

Hexaware focused on providing tailored risk management and compliance solutions to asset management companies, capital

market participants, banks and financial institutions worldwide. Solutions imbibe best practices of the industry. We work with CROs,

CIOs AND CFOs, and their organizations to deliver innovative solutions in the areas of risk and compliance. Our resources include

practitioners/ industry leaders in credit risk, market risk, operational risk and structured finance with prior experience of working with

leading asset management companies, banks, financial institutions, consulting firms and risk analytic product companies. Many of

our people possess advanced degrees in risk, finance with many possessing certifications from GARP/PRIMIA/CFA and we have

strategic relationships with leading risk software and technology vendors

Our Solution

Risk Data Infrastructure

Credit /Counterparty Risk

Models, Scorecards,

Economic CapBasel II Framework

Credit Analytics, Risk Adjusted Framework

Market risk VAR UCITS III/ IVRisk Adjusted

Return

Operational/compliance Risk

VAR

Causal Models

Basel Approaches,

AMAKRI, Financial Crime

Liquidity RiskEAR/ VAR/ Stochastic Modeling

Interest Rate-Trading Book,

Internal Models Approach

Gap, Sensitivity, NII, NIM , EAR etc

Risk

Aggregation

and Early

Warning


Services for

Middle Office

Operational Risk

Roll-out of leading 3rd party operational risk and GRC platforms

Local and global roll-out strategies and best practices

Conducting workshops for gathering solution

requirements

Iterative solution configuration

Pre-built solution extensions and migration of loss data

Testing and training

ORM Consulting

Define operational risk management frameworks,

policies and processes for financial institutions

Design of control testing methodologies

Gap analysis and business requirements specifications

Vendor & technology selection for managing

operational risks

Implementation of Basel II Advanced Measurement

Approach (AMA) for capital estimation

Methodologies and implementation of Economic Capital

frameworks

Compliance

Implementation of Anti-Money Laundering solutions

Design and implementation of roadmaps for Basel II,

MiFID, Anti-Money Laundering and SOX compliance

.

Hexaware Service Offerings in Middle office functions

Market Risk

Model validation and refinements – Independent

validation of methodology, analytics and implementation

of market risk models

VaR analytics – Development of framework,

implementation and process outsourcing

Risk dashboards and reporting – Custom and pre-built

reports to integrate different instrument and product

types across different platforms

Internal audit services – Analytical support to internal

audit groups, spreadsheet evaluation & validation

Stress testing – Conduct independent stress testing of

market risk models.

Counterparty risk and collateral management –

Implementation of counterparty risk systems including

simulation engines, netting and collateral rules

Data aggregation and cleansing – Linking multiple data

sources and providing frameworks for the identification

of most recent and accurate values

Credit Risk

Management for leading 3rd party credit risk

management software or bespoke systems

Commercial rating systems - Design and

implementation of Basel II risk rating scorecards and

PD models, including data and system requirements

Consumer credit scoring – Modeling & analytics

regarding consumer campaign management &

behavioral scorecards

Basel II implementation – Pillar 1, Foundation IRB and

Advanced IRB (Internal Rating-Based) approaches for

Minimum Regulatory Capital, PD, LGD and EAD

calculations

Data quality and testing – Pre-built data quality rules for

cleaning portfolio, counterparty and financial spread

data

Commercial real estate reporting – Combination of pre-

built and customized reports for financial institutions for

segmenting and understanding direct and indirect

commercial and residential real estate exposures

Model validation and refinements – Independent

validation of methodology, analytics and implementation

of credit models

Internal audit services - Analytical support to internal

audit groups and spreadsheet evaluation

Stress testing – Stress testing of internal rating systems

based on transition matrices & customized scenarios

Benchmarking of internal rating systems - Using market

data for loan pricing & market credit default swap

Why Hexaware?

Deep understanding of strategic and tactical challenges

confronted by financial institutions in risk management

functions and processes. Our consulting methodologies

enable clients to perform a quick analysis of existing

state, understand their target state and create a roadmap

for implementation.

Wide range of experience in implementing risk

management solutions from multiple software vendors.

Our vendor selection methodology enables clients to

score software vendors and arrive at an objective

decision during the selection process. With a holistic view

of the risk domain, independent of the solutions available

in the market, we help clients choose the right solutions

meeting their current as well as future business needs.

Leverages domain, functional and technical consultants

to provide end-to-end implementation of risk

management systems for credit, market or operational

risk. Our consultants have the right blend of business and

technology expertise. Partnered with leading risk

management software vendors and has a dedicated lab

for training consultants.


Services for

Middle Office

Reconciliation Capabilities

Hexaware resources have worked in reconciliation space and

have expertise in working with Leading Reconciliation products

like TLM and Eagle. Hexaware has developed an in-house

reconciliation product to track and trace business data across

two systems called “Verzoenen”.

By virtue of our experience in working with Leading Asset

Management companies in the Reconciliation space, Hexaware

has gained strong Domain Knowledge in Reconciliation and has

handled Position, Cash, Transaction and General Ledger

Reconciliation. Some of the focused areas in the reconciliation

process are:

Trade Instructions and Confirmations of

Investment Manager Vs. Broker

Reconciliation of Investment Manager System Vs.

Custody System

Nostro Reconciliation

GL Reconciliation

Ledger / Sub Ledger Reconciliation

Settlements Reconciliation

Payments Reconciliation

.

Success Stories - Risk Management

A Top 2 Global Bank: Implementation of Basel II Capital

Adequacy framework

A Top 10 Global Bank: infrastructure advisory assignment for

BASEL II implementation providing roadmap for Pillar I and

ICAAP processes. This included gap analysis and client

preparedness assessment. A roadmap was advised

A Top 10 US Bank: Risk strategy and consulting engagement

for developing a revised methodology for ALLL (Allowance for

loan and lease losses). It provided the bank with a robust,

accurate and efficient allocation mechanism aimed at

preventing sudden capital shocks. This approach aligned

with the economic capital calculations and included macro-

economic adjustments

A Top 10 US Bank: Counterparty credit risk analysis

infrastructure with graphical user interface and key exposure

monitoring variables using SAS Tools

.

Success Stories - Reconciliation

Client is a leading provider of “investment tools” globally

for investment banks, hedge funds, asset managers,

regulators, rating agencies & insurance companies.

Loading data Files (Portfolios, Holdings, Security

master, transactions) into the tool

Reconcile Market Values of Portfolios

Reconcile Transactions

Calculate P& L for the Portfolio

US-based, Global Asset Management Firm: Support the

migration of Data from Smart stream SSR to Smart stream

TLM

A Top 20 Global Asset Manager: Support and Maintenance

of Smart Stream SSR Application

A Leading Mutual Life Insurance Company in US:

Implementation and Reconciliation of Derivative Trades from

Legacy System to Murex Application during Migration

.


Services for

Middle Office

About Hexaware

Hexaware is a leading global provider of IT and BPO services. The company has achieved leadership position in domains such as Banking, Financial Services, Insurance, Transportation, Logistics and HR-IT solutions. Hexaware focuses on delivering business results leveraging technology solutions and specializes in Business Intelligence & Analytics, Enterprise Applications, Independent Testing and Legacy Modernization. Hexaware has been providing business technology solutions for over 18 years and offers world class service delivery, technology leadership and skilled human capital.

NA Headquarters 1095 Cranbury South River Road Suite 10, Jamesburg, NJ 08831 Main: 609-409-6950 Fax: 609-409-6910

India Headquarters 152, Sector – 3 Millennium Business Park „A‟ Block, TTC Industrial Area Mahape, Navi Mumbai – 400 710 Tel.: +91-22-67919595 Fax: +91-22-67919500

EU Headquarters 4th Floor, Cornwall House 55-57 High Street, Slough Berkshire SL1 1DZ, UK Tele: +44 (0)1753 217160 Fax: +44 (0)1753 217161

APAC Headquarters 180 Cecil Street, #09-03, Bangkok Bank Building, Singapore 069546 Tel.: +65-63253020

For all Hexaware office locations, visit: http://www.hexaware.com/worldwide.htm

[email protected]

Safe Harbor Certain statements on this brochure concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in tele-communication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Hexaware has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry.

Hexaware - Capital Market Middle Office Capabilities

Technology

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