HOC - HOC’s ePIC Solution - A Trading Delight

The Challenge

Monitoring internal limits violations for all derivatives and commodity trading activity becomes challenging once trading activities are on the rise. Timely reports are particularly important for businesses to function smoothly. Monitoring must be done for a broad array of limits – like position, value, term, duration, portfolio, etc. At most, a manual report can be available for the previous day’s trades and not intraday.

Moreover, a mechanism needs to be in a place where the violations done by traders have to be notified to traders and their managers to whom they report. Capturing trades, filtering, and identifying violations are difficult, eventually resulting in a lapse.

There needs to be a solution that can:

Consolidate data from respective sources efficiently
Centralized management of trader limits and audit of changes
The report should be available before the start of the next business day
The report should be available intraday multiple times

Should be able to detect various limits like position, value, term, duration, portfolio, etc.
Report violations in a timely fashion with appropriate notifications
Reduce operational risk and improve resource utilization

The Solution

ePic was considered the best fit for this situation and was finalized to be deployed due to its ability to rapidly execute the solution with a proven implementation experience. It can easily connect to upstream and downstream data sources and model their business processes in the platform. Trades data is fetched from the appropriate source, breach conditions are checked, and a violation report is generated before the start of the business day.

With a defined mechanism in place, the firm was able to address multiple violations in one go:

Trader Limit violations : includes position, value, term, duration, and portfolio limits
Unauthorized Trader : A report is generated when a trader having no trading authority enters a transaction into the deal capture system
Unauthorized product : A report is generated when a Trader transacts on a product they are not authorized to trade
Change in trader limits : Lists all traders defined in the system with their respective limits. This is generated when there is a change in limits, or when a new trader gets added
Limit maintenance : Centralized repository of limit definitions with the flexibility to add more categories. ePic also allows maintaining multiple datasets of the limits. This helps maintain limits for multiple applicable dates and the reports can be executed for any past date if required
Consistent validation rules : Rules to detect violations are consistent and the same get applied every time as against manuals that have a chance of being different
Batch process : The entire process of pulling data from source till the report generation happens at a single click, and as a scheduled process
Prior Day report before the start of the business day : Users get the report for the previous day on emails before the start of the business day
Intraday violation reporting : The report can be scheduled to generate multiple times a day at specific intervals. This helps traders in taking corrective actions at run-time
Built-in escalation mechanism : Enables traders and their managers to get in-time notifications about the violation enabling them to take corrective action

Outcomes and Benefits

Summary view of violations is possible for stakeholders to take instant stock of the situation
Multiple violation categories and timely detections are now possible
Single-click report availability. Data fetching, processing, and report output, all in a single click
On-demand reporting. The report can be manually generated when needed during the day
Users can directly generate the report without any help
Reliable reports as they are system generated
Timely report availability, at the start of the business day

Automation of monitoring and reporting crucial trader limit breaches

The Challenge

The Solution

Outcomes and Benefits