Roar Software is revolutionising the experience of financial advice with the release of its industry-first advice viewing tool, allowing clients and advisers to view and interact with a Statement of Advice (SOA) or strategy document in a web-based environment.
It allows clients to ask questions in real-time and an adviser to provide instantaneous feedback on an SOA, improving communication and eliminating the risk of misunderstandings.
With the flexibility to receive research feeds from any research house, the tool also provides electronic checkpoints to ensure the client and the adviser agree on the goals set.
According to Roar Software’s CEO Kevin Liao, the enhanced engagement provided by the tool is a breakthrough for the industry because it supports and strengthens the advice process without complicating it.
“The tool advances the client experience of financial advice by showing them in real time their advice strategy, so they can discuss it and make changes with their adviser, facilitating client understanding and education and meeting adviser’s compliance obligations.”
The SOA capability tool is the latest addition to Roar Software’s integrated Advice Marketplace, a fresh and collaborative environment where advice practices can house all their software application in a connected way.
Using Roar Software’s Advice Marketplace, practices can pick and choose what software they use and centralise it in a way that means no messy data migration whenever they choose to substitute one application for another.
“Roar Software is providing the future of financial advice today,” said Liao. “We are offering practices who are tired of grappling with the same technology solutions a new and fresh approach.”
Formerly YTML, Roar Software is drawing on its ten-year history as a technology consultancy and award-winning innovator to address key industry challenges.
“We know this SOA tool is what is needed to breakthrough the client engagement and compliance issues that have plagued the industry and held it back,” explains Liao.
Roar Software works with a range of financial advice practices, licenses and investment partners searching for technology solutions that satisfy their needs while complimenting their existing software capabilities.
Clearing House Margin calls in Q1 2020
Clearing Houses have recently published data on the magnitude of margin calls they made in Q1 2020 and these are interesting to say the least. Given the massive price volatility we observed in March across all asset classes, we knew these were going to be big numbers, so let’s dive into the detail.
Let’s start with the maximum total variation margin paid to the CCP on any business day in the quarter, which is quantitative disclosure 6.7.1 in the CPMI-ISOCO disclosures.
For selected clearing services, we show this disclosure for Q1 2020, the prior high since March 2016 and the quarter of the prior high.
- Almost all of the Clearing Services had a record high of VM paid to them on a single day in the quarter ending March 2020
- LCH SwapClear with the largest VM at $26.3 billion, with the prior high being $17.9 billion in the quarter ending Sep 2019.
- CME Base/IRS, which is both Futures and Swaps with $18.1 billion and the prior high was $14.3 billion in the quarter ending Mar 2018.
- (It is entirely possible that there were other days in 1Q 2020, with higher VM than the prior quarter highs and given what we know about market moves it is likely that was the case for some CCPs, but the disclosure data do not tell us that).
- ICE Europe F&O with $10.2 billion, prior high of $7.1 billion in Sep-19 quarter.
- Eurex Clearing with $9.4 billion, prior high of $7 billion in Jun-16 quarter.
- The only Clearing Services in our list to not exceed their record highs in Q1 2020 were HKEX HKCC and SGX DCC, who both had bigger numbers in the March 2018 quarter.
- For ICE Credit Clear and ICE Clear Europe Credit the prior high quarter was June 2016
While it is unlikely that all these CCPs had the highest VM paid on the same business day, we may as well add up the first column to get a grand total of $84.6 billion. Wow!
This is the worst case and the true number on the largest business day in the quarter is likely to be somewhat lower, but still it gives an idea of the massive flow of cash (VM is always cash) from member firms to CCPs and of-course from CCPs to member firms
And from the price volatility we observed (see Crashing rates) we know that there will have been massive flows on other days too.
A daily back and forth to make sure that if the music stops for one firm, the money is in the appropriate place to minimize and localize the loss.
A process that worked exceptionally well in the most volatile period since the Great Financial Crisis of 2008.
Next the maximum aggregate initial margin call on any business day in the quarter, which is quantitative disclosure 6.8.1 in the CPMI-ISOCO disclosures.
For selected clearing services, we show this disclosure for Q1 2020, the prior high since March 2016 and the quarter of the prior high.
- Again as with VM, almost all the CCPs had a new record high in Q1
- Options Clearing Corporation stands out with $31.8 billion, however before we jump to conclusions recall that I did not have OCC in the VM table. This is because for OCC the 6.7.1 disclosure states “OCC does not separately report variation margin payments”, meaning that the $31.8 billion combines both VM and IM. This brings OCC in line with other comparably sized CCPs such as CME, Eurex and LCH.
- Eurex Clearing at $17.6 billion also stands out but referring to the explanatory notes from Eurex, we see the note “including intraday variation margin calls”, explaining the relatively large size of this number.
- CME Base, the core Futures and Options franchise, is then the largest with $9.6 billion, which is massively higher than it’s prior high of $1.8 billion in the Sep 2017 quarter. Given the moves we have seen in S&P500 (see here) and Crude Oil, two of the largest underlyings at CME, the size of which we have not seen since 2008, it is not surprising that the record high is so much larger.
- LCH SwapClear with $6.6 billion is actually just lower than its record of $7.1 billion in June 2016, the Brexit referendum quarter.
- ICE Clear Europe F&O with $1.8 billion is far lower than the $8.8 billion seen in the same June 2016 Brexit referendum quarter, not surprising given the short sterling contracts cleared there
- ICE Clear Credit with $6 billion is much higher than its prior record of $1.3 billion in the Sep 2017 quarter, again similar to CME Base not surprising given the massive price volatility in the underlyings, in this case CDS Index and Single-names in the quarter.
- The other Clearing Services to not exceed their highs in Q1 are ASX CLF, HKEX HKCC, ICEU CDS, JSCC IRS.
While it is most unlikely that all these CCPs had the highest IM Call on the same business day, we may as well add up the first column to get a grand total of $87 billion, with the caveat that a chunk of this ($20 billion?) is VM not IM.
But even $67 billion is a large worse case. Again like VM, this back and forth of IM between CCPs and member firms and member firms and clients is important to ensure that default losses are minimised.
However the extent of the IM increases is down to the choice of procylicaility of margin i.e. how much should margin increase between low volatile and high volatile periods. And as my article in Risk.Net shows today, the wide variance in IM percentage changes is surprising and warrants further debate discussion.
At Clarus our CCPView product has Quantitative Disclosure data from thirty-six Clearing Houses, each with more than one Clearing Services and this quarterly data starts in Sep 2015.
However as with any summary, it is limited and may leave out details that are important for your firm.
With over 200 quantitative data fields and quarterly figures from September 2015 to December 2020, for 36 clearing houses, most with more than one clearing service, that is a lot of data to analyse.
The Importance of AppSec in Digital Banking and Fintech
As digital transformation gathers pace across the global financial sector, migration to cloud-based and app-based infrastructure and products becomes ever more commonplace. We recently spoke to Jeff Williams, CTO and Co-Founder at Contrast Security to find out why organisations need to pay more attention to application security than ever before.
Hi Jeff, thanks for speaking to us. First of all, for any of our readers who have not come across Contrast Security before, could you please give us a short intro into what you do and the services you provide?
Contrast Security is the leader in next-generation application security, embedding code analysis and runtime protection directly into software. Contrast’s patented deep security instrumentation completely disrupts traditional “outside-in” application security approaches with integrated, comprehensive observability that delivers highly accurate assessment and always-on protection of an entire application portfolio. This eliminates the need for disruptive scanning, expensive infrastructure workloads, and specialized security experts. The Contrast DevOps-Native AppSec Platform extends security from development through production by using telemetry to identify true vulnerabilities in runtime—accelerating development cycles, improving efficiencies and cost, and enabling rapid scale while protecting applications from known and unknown threats.
Given our audience comes solely from the financial sector, it’d be good to know the types of companies you work with in the space and the sorts of the projects you’ve worked on.
Contrast Security has worked with financial services organisations of all types around the world. Our customers include 10 of the top 25 financial institutions. Customers that have told their Contrast story include one of the top 10 banks in the world, financial data analytics platform provider Envestnet | Yodlee, point-of-sale lending platform GreenSky, and a large regional U.S. credit union.
Contrast’s financial customers tend to come to us with one or more of the following use cases:
● Eliminating noise: Improving the productivity of both development and security professionals by virtually eliminating false positives and providing real-time feedback when an issue does arise.
● Unleashing DevOps: Enabling developers to do their work without security-related interruptions against aggressive deadlines by making application testing continuous and in the background.
● Scaling AppSec: Contrast is a distributed solution, and continuously monitors and protects many thousands of applications in parallel, enabling teams to accelerate development, secure open source, and prevent exploits with a single platform.
As banks and fintechs move increasingly along their digital transformation journeys, they become ever more cloud-based and app-based. What does that mean in terms of their security?
As services become more cloud-based and application-based, the complexity of the architecture increases. As they move into multiple clouds, organisations find themselves with massive variations in hardware, software, and systems—with differing integrations and interoperability. This makes it extremely difficult to manage a migration to the cloud from a logistical perspective. It also makes it difficult to ensure application security: 66% of enterprises list “understanding application dependencies” as their number one migration challenge. At the same time, the percentage of data breaches linked to software vulnerabilities more than doubled to 43%. And shifting to the cloud does not eliminate complexity: 54% of applications in the cloud today were not designed for the cloud, and 55% of organisations have applications siloed in different clouds.
Most FIs and fintechs have migrated from on-premise to cloud based environments. Why should a review of application security need to go hand in hand with the process?
As discussed above, a migration of applications from on-premises to cloud-based services is a complex move. Software security should definitely be an integral part of strategic planning for the overall project—rather than adding it as an afterthought. Application security can be simplified dramatically when it’s built into the standard software platform, including vulnerability monitoring, open-source library analysis, attack detection, and runtime protection. The move to cloud is a unique opportunity to enhance your infrastructure and simplify application security.
Do you believe that the Covid-19 period will leave a lasting legacy in terms of the digitalisation of the banking and fintech sectors?
While the pandemic has prompted many organizations to dramatically slow overall spending and lay off employees, all indications are that COVID-19 may accelerate investment in digital transformation initiatives. A recent study by OpsRamp found that despite economic uncertainty due to COVID-19, 61% of IT and DevOps leaders expect to accelerate their digital transformation initiatives and projects—with 58% increasing spending.
As a result of this growth in applications and faster velocity per the modern software development life cycle, legacy AppSec that relies on capabilities such as line-by-line code scanning (static application security testing [SAST]) and black-box testing (dynamic application security testing [DAST]) simply cannot scale. As these AppSec models rely on signature-based engines to identify application vulnerabilities, they miss false negatives (unknown threats and zero-day attacks) that expose organisations to serious risks. They also incur large numbers of false positives that lead to alert fatigue, which when combined with pressure from C-suite leaders to place velocity and code releases over security, ratchet risks up further.
Clearly a data breach for a financial institution could result in significant financial and reputational damage – aside from countering this, what are the other tangible benefits of working with an application security provider like Contrast Security?
Contrast Security is devoted to keeping the world’s applications safe, exemplified by the Contrast Community Edition, the only DevOps-native AppSec platform that can be accessed for free. It enables organisations to move beyond traditional point-in-time, signature-based security approaches—without the requirement of an initial investment. The Contrast team also provides extensive resources to help developers, security professionals, and C-suite leaders come to a deeper understanding of AppSec.
Jeff Williams will present “Thousands of Apps vs. Thousands of Attacks – How to Secure Code at Enterprise Scale” at 4.15pm BST on Wednesday 15th July during FinTech Connect’s online digital transformation event, DX Connect.
Brazilian Fintech Swap Raises $3.3 Million Through Seed Round Led By ONEVC
Swap, a Brazil-based fintech startup, announced on Tuesday it raised $3.3 million through its Seed funding round, which was led by ONEVC with participation from Global Founders Capital, Soma Capital, Brad Flora, a.b.seed Ventures, Flourish Ventures, Canary, Hustle Fund, Rhombuz VC and Patrick Sigrist.
Founded in 2018 by Douglas Storf and Ury Rappaport, SWAP is described as a full-service fintech partner that empowers next-generation merchants to expand their markets, deliver “unmatched” product experiences and boost their economics. While sharing details about the company, Store told Crunchbase News:
“To launch your own card or app, you would have to go through a long cycle of engaging with the credit card company, and that is very expensive. We can come in and cut the time by renting our license to you or use connections we already have.”
Rappaport further commented:
“We are like AWS [Amazon Web Services] for payments, helping companies improve connection, experience and embed finance into their business so they can stop outsourcing those functions.”
Swap is planning to use the seed funds to finalize product infrastructure and runway. Swap is also looking to focus on onboarding new clients.
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