Foreign Exchange and Money Market

Operations
Industry Trends and Challenges
In the last decade the Foreign exchange and money markets have undergone significant changes. Volume growth and emergence of new
class of investors is now making FXMM instruments a distinct asset class. FXMM is now seen not only as a hedging instrument but also as
a specific class of asset for trading and speculation. Last decade also has seen emergence of hedge funds and retail investors as key con-
tributors to demand. Cross border investment activity has also resulted in increasing demand for FX instruments. Wide spread usage of
Electronic trading networks and innovative trading strategies necessitated changes to infrastructure, workflows and overall resiliency of
IT systems. These key trends are shaping new approaches to risk management, collateral management, regulation and client servicing.

Success of FXMM operations is heavily contingent not only on a scalable, reliable system but also on controls and risk management fea-
tures these systems provide. Reducing Cost per trade and improving STP rates continues to be high on the agenda for bank executives
as the industry adopts a commoditized operations model and the variety and the complexity of the products / instruments increases.
Risk management and compliance to new regulations without escalation in costs continues to shape not only investments in the new
systems but also the back office operations. These challenges are driving Change The Bank (CTB) initiatives to focus on optimization of
existing operations infrastructure and workflows, increased adoption of outsourcing and off shoring strategies, and underlying platform
improvement.

Cognizants Capabilities across Foreign Exchange and Money Market Operations

Cognizant has strong experience of supporting marquee clients across instruments and products in the FXMM operations. Cognizant
provides 85% offshore coverage for FXMM Operations of a leading investment bank, making this engagement one of the largest
third party outsourcing operations.

Middle and back office experience:

Checking with Counterparties/Clients for Trade confirmation for open trades within timelines
Confirmations Ensuring on-time and accurate payments as per market cut-off timelines and Capturing all SSI
and settlements updates that are received from Clients/Agents
Investigations for re-effecting duplicate payments, Updating Omgeo alerts

Reconciliation between Front Office and Operations systems, Internal Books and passing of Internal
Ledger and Journal entries
Reconciliations
Reporting and clearing of breaks, investigating Non-Receipt/Non-Payment cases
Liaising with Business for P&L write offs and Maintenance of Suspense account

Compute and make Margin calls for counterparties

Margin Managing fails and interest processing
Management Prime Brokerage Margins: Approving payments, Setups, Exceptions Processing, Margin calls,
Pricing issues management
 Dispute Trade reconciliation with clients and managing all types of portfolio disputes
Management Identification/ resolution of Valuation differences and Unmatched trades

Valuations: Prepare statements for clients and counter parties

Valuation and Daily P&L Generation reconcile between risk management system,
Accounting ledge and P&L, review balance sheet movements, preparing trader packs
Review attributions, book accruals and allocations

Timely Reporting of Trade Volumes/STP/Clearance/Outstanding etc.

MIS Reporting
Weekly KPI performance reporting
and Control
Reporting of Basel II items and Impact resolution of Outstanding

Clients serviced Products supported Regulations Confirmed

Inter Banks T-Bills, Collateral and dispute Confirmations, Product control
Corporates Commercial Papers (CPs), management settlement and recon SEC
Hedge Funds Certificate of Deposits (CDs) MAS BAFIN FASB
Pension Funds Unsecured Loans & Deposits HKMA SEC FSA FSA
Fund Administrators Reverse Repos Fed Reserve SEC IASB
Broker/Agent Banks Swaps FINMA MAS
Foreign Exchange: Forwards,
Spots, NDFs/NDOs
Money Market
Vanilla Options
Precious Metals Options

Research capabilities:
Basic Data monitoring & tracking news from various sources to analyze the impact on
Maintenance & FX and commodities under coverage
Designing Economic calendars (Weekly, Monthly), building data models and update periodically

Creating reports which include technical analysis on FX and precious metals

Analysis/
(Daily, Weekly, and Quarterly) and writing commentary on various economic releases
Brief write-ups
and implications in different markets

Products Supported Geographies Data Sources

FX Perspective Asia Bloomberg
Morning Advisor Europe Thomson Reuters
Weekly Calendar US Haver
Emerging Markets Navigator Yield book
Emerging Markets- India Nutshell Eqargs

Change The Bank (CTB) Focus

Cognizant delivers significant benefits to clients through CTB initiatives by leveraging deep operations experience, a pool of techno
functional CTB Consultants and Lean six sigma experts.
Below table summarizes some of the benefits we delivered through CTB initiatives to our clients.
Theme Impact
Consolidation 45% productivity benefits through various process improvement projects for past 3 years notably through
consolidation of operations into a single 24x7 team. This allowed for benefiting from cross team buffers and
effectively managing spikes in specific instrument volumes
Standardization 80% reduction in failed payments and claims by standardizing operations across instruments and products
Tool implementation Error Financing Costs brought down by 96%. This was achieved through standardization of error codes and
implementing a CRM workflow tool. Set up a Zero tolerance group that identified error patterns and worked with
operations team in bringing down the errors through personalized improvement plans and feeding CTB initiatives

World Headquarters European Headquarters India Operations Headquarters

500 Frank W. Burr Blvd.
Teaneck, NJ 07666 USA
Phone: +1 201 801 0233
Fax: +1 201 801 0243
Toll Free: +1 888 937 3277
Email: inquiry@cognizant.com
1 Kingdom Street #5/535, Old Mahabalipuram Road
Paddington Central Okkiyam Pettai, Thoraipakkam
London W2 6BD Chennai, 600 096 India
Phone: +44 (0) 20 7297 7600 Phone: +91 (0) 44 4209 6000
Fax: +44 (0) 20 7121 0102 Fax: +91 (0) 44 4209 6060
Email: infouk@cognizant.com Email: inquiryindia@cognizant.com

Copyright 2013, Cognizant. All rights reserved. No part of this document may be reproduced, stored in a retrieval system, transmitted in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the express written permission from Cognizant. The information contained herein is subject to change without notice. All other
trademarks mentioned herein are the property of their respective owners.