Trade Lifecycle Management With TIBCO Business Events and TIBCO iProcess

8/6/2019 Trade Lifecycle Management With TIBCO Business Events and TIBCO iProcess

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Sudhir Gupta

Director,

Banking and FinancialPractice

Cognizant TechnologySolutions

Trade Lifecycle ManagementUsing TIBCO Event Fabric

Platform

Deb Ghosh

Principal Architect,

TIBCO Quantum Leap


2/27

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

Solution Architecture

Key Differentiators


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Introducing the TIBCO Event Fabric


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The TIBCO Event Fabric Platform An executive summary

Decision problems are everywhere Manage risk including Compliance and Regulatory requirements

Perform multi-product real-time integrated Fraud/Financial Crime management

Monetize the huge un-tapped opportunity in Inbound Customer Interaction bypresenting the Next Best Move associated with the specific customer in Real time.

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 technologythat

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 riskbased losses and revenue leakage etc


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Whats the Problem in Current Decision Architectures?

Silo Oriented evolution most infrastructure has grown in (silos)

Multiple application/ multiple channels

Multiple reference masters

Things get exponentially more complex with M&A is added to the mix

Huge Data Latency also called the Knowledge-Data divide

Front-end systems (channel systems) are rich in transactional capability, but poorin end-end customer knowledge and context around the specific customerinteractions

Back-end Data-warehouse/Business Intelligence tools have the exactly oppositeproblem

Closed Loop there is no easy way to take a full circle from the discovery toaction

Time to production a new insight takes a long time to put to production


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TIBCO has perfected a technology that is in its 3rd generation now to solvethis (and other similar) problems. The technology is called

TIBCO Event Fabric Platform

Taps events from any source within the enterprise (and extended eco-system)

Correlates (real-time) events with historical information to infer and predictnext best move next best offer/next best service/risk level to a trade

The platform is closed looped with identification of the next best opportunity(Business Situational Analytics) and closing it with full life cycle beingmanaged

Some of the biggest banks in the world have applied this platform capabilities

to a variety of use cases like Predictive Next Best Offer the holy grail ofOrganic customer acquisition, retention and cross-sell/up-sell


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TIBCO Event Fabric Architecture

Txn System Txn System Txn System Txn System

Business Process Management

Enterprise Service Bus/SOA

Manual/Point-point

Reference Masters

Operations

Analytics DWH/BI

Newly leveraged Use Cases

Traditional Use-Cases

High performance Event Correlation

Operational Data - Memory optimized images

Business Situational Analysis

Rules & Inference

TIBCO Event Fabric

Non Intrusive

First Generation

(Not part of

current

discussion)

Current

GenerationAccount Opening

Channel Integration

Predictive Cross-Sell/Up-sell

Multi-channel Customer Experience

Fraud/Compliance/AML and Ops Risk Platform

Dynamic Offer Management

Transaction

Events

Classic Fabric


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Predictive Trade Lifecycle

Management


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Growth of Trade Volumes

0

500

1000

1500

2000

in $

trillion

01 02 03 04 05 06 07

Year

Value of Transactions cleared & Settled at DTCC

Source: DTCC website

Ever increasing trade volumeshave increased the stress on tradeand settlement systems that werealready under duress due to

factors like Increasing settlement attributes, new

regulated exchanges, ECNs, ATSs etc

0

1

2

3

4

5

6

7

8

in $ trillion

Dec- 01 Dec- 06

Cross border holdings US - Rest of the world

Foreign stocks & bonds

held by US Citizens

US stocks & bonds

held by rest of the world

Increase in cross border trades hasadded to the complexity of trade andsettlement cycle

Possibility of these trades failing is higherdue to higher number of intermediaries

and additional parameters like time zonesand exchange rates

Higher chance of parties havingincompatible views on the terms of a trade

0

10

20

30

40

50

60

in

million

01 02 03 04 05 06 07

Year

Avg Daily Volume at National

Securities Clearing Corporation

Source: DTCC


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Need to Reduce Costs

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 failsmanagement can be an important lever in controlling costs


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Why do Trades Fail?

Typical reasons for trade failures

Lack of shares with counterparty

Miscommunication

Economic issues parties disagree on traded values Disagreement on delivery mode FOP vs. DVP

Operational issues

Typical large Investment bank - Equity trading for North America

0 5 10 15 20 25 30 35 40 45

Weekly trading value

Value of trades that settle by the value date

Value of trades that settle post value date

Value of trades that get cancelled

Weeklytrading

numbers

in $ billion


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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 theprice 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


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Fails Management Process How it works?

Trade and settlements systemsprovide mechanisms to operations

team for monitoring trades

These systems also provide the

operations team with relevant datato analyze the reasons of failure

and to guide them through next

steps

Failures are addressed by a

combination of technology, manuallogistics and smart-sourcing initiatives

Steps to resolve an issue will vary depending on the nature and

complexity of the fail

Resolving a complex case is a multi-step process spanning multiplechannels of communication to match the information and settle the trade


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Fails Management Process What are the Challenges?

Nuances in Fails Management process are driven by a number offactors

A landscape of large number of disparate systems and the integration

requirements among these systems Involvement of multiple parties across locations and geographies

Trades are initiated through multiple channels, not always possible tovalidate the trade data with the counterparty

Some of these nuances are more pronounced in case of crossborder trades

As number intermediaries involved increases so does the probabilityof incompatible views on assumptions and practices involving thesettlement mechanism and timing

Differences can be on applicable costs, taxes, risk appropriation etc


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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 breakBEFORE it actually breaks?


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We introduce a unique solution platform to address that

goal a Predictive Trade Lifecycle Management

Platform powered by TIBCO Event Fabric


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What TIBCO Event Fabric Platform can offer?

TIBCO Event Fabric platform based solution can address the Fails

Management problem

Event probes bring in events from the trading ecosystem (trading

systems, reference stores, financial markets) and are represented as aasynchronous event cloud from which IT systems have to filter out

relevant information

Complex Event Processing capabilities of TIBCO Business Events can

be used to co-relate asynchronous events that may help predict trade

failure before the trade actually fails

Business Process Management capabilities allow easy follow up of the

targeted cases from the Predictive platform significantly improving the

accuracy of trade processing


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How Complex Event Processing Works

Identify parameters on which tradesneed to be monitored

This is achieved by rule basedfiltering

Rules are based on historical trends

Trades thus identified areinstantiated in memory - theybecome part of the state machine

Trades in state machine/ memory are monitored This would be a a subset of all trades

Another independent event occurs somewhere in the ecosystem

It gets fed into TIBCO Event Fabric Platform

Gets co-related with one or more trades in state machine, it is identified asa potential fail and is forwarded to the operations team for follow up


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Complex Event Processing in Fails Management

Fails Management is an ideal candidate for Complex EventsProcessing (CEP)

Number of different parameters can impact the outcome of a trade

These parameters can be dependent on number of asynchronousevents

Traditional BPM solutions can not be used to co-relate these

asynchronous events by simply defining rules

CEP solution can be used to monitor trades so as to ascertain impact

of various events and their relation with various trade parameters


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BPM in Fails Management

Fails Management provides an ideal landscape for a BPM solution Improves the turn around time and accuracy

Provides a clear visibility of fails issues, with granularity on fails reason toenable root cause analysis

Highlights ownership of issues and provides detailed audit history onexceptions

Provides automated complex allocation rules for routing exceptions by

region and business group enforcing ownership

Provides automated exception and trade prioritization based on

transaction characteristics and timing


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Typical Fails Management Scenario

Traditional flow vs. CEP solution based on TIBCO Event Fabric Platform


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Conceptual Architecture

Exception

Resolver

Situation Designer

Reasoning (Temporal/Spatial)

Correlation Engine

Event Grid

State Machine

Ref Data HistoricalSupport (Network,

DB etc)STP (Existing)

VisualA

nalytics


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Key Differentiators

Traditional solutions in this space are reactive with latencysometimes having a significant down-side on bottom-line

TIBCO Event Fabric Platform based solution is a pro-activePREDICTIVE 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 eventswith historical data in real-time to predict likely events

Ordinary rules engine falls short

The platform provides powerful state machines out of the box

Provides the ability to monitor at-risk trades continuously assessing theimpact of events in the ecosystem

Extremely scalable architecture

Not database-centric, uses distributed cache

Runs on distributed blade class platforms


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Thank You

Trade Lifecycle Management With TIBCO Business Events and TIBCO iProcess

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