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Case Study
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Razor has been implemented successfully by a number of
financial institutions across the globe.
Please read how
Razor has been deployed and the advantages it provides.
Federal Home Loan Bank, Pittsburgh
Overview
The Federal Home Loan Bank of Pittsburgh is one of twelve banks
in the Federal Home Loan Bank System, a national network of
privately owned wholesale banks, and has assets worth over $95 billion.
It embarked on a replacement program for its aging in house
Counterparty Exposure system as they where faced with a number
of mounting challenges:
- Increased trading and hedging book complexity;
- Growing regulatory and internal policy controls;
- Volatile credit and capital markets;
- An aging in-house system with:
- Limited product and policy coverage;
- Limited data management capabilities;
- Inflexible application of policy mandate;
- Limited reporting & analytics functionality.
FHLBank Pittsburgh looked to both their in-house capabilities
and to external vendors to find a solution that could fully meet
the Bank’s Credit Exposure Measurement and Management requirements
including Basel regulatory requirements across a broad set of asset classes.
Razor was identified early on as a best fit solution to meet
the Bank’s immediate needs, while providing the flexibility and
scalability to meet the Bank’s changing needs over the next decade.
The Requirement
The CES replacement program involved the replacement of a 10 year old
in-house system with Razor’s Limit Management and Exposure measurement
modules. These modules provide the bank with the required functionality to meet
its current needs, and to retire existing analysis processes that became
redundant with the implementation of Razor. Key deliverables included:
- Real time Pre Deal Check capability ensuring all trading confirms
to the Bank’s Risk Policy;
- Online alerts highlight changes in Credit Ratings and breaches of
regulatory limits;
- Consolidation and automation of manual user or spreadsheet driven
processes;
- Integration with the Bank’s systems and data sources;
- Configured automated processes to apply Policy and Regulatory
requirements;
- Deployment to a wide user base across 4 internal business units;
and
- Hierarchical information and aggregation methods configured to
support common credit analysis techniques.
An internal FHLBank Pittsburgh team of technology, operations, trading
and business analysts coupled with specialist IT&e implementation consulting
and support services ensured the CES replacement program was delivered on time
and on budget in a period of just 7.5 months.
Technology
Technology Integration costs were kept well within budget. The technology
team integrated one of the bank’s existing Trading systems with Razor and
deployed reconciliation routines utilizing Razor’s XML schemas and messaging
interface with their existing data-stores. These reconciliation routines
replaced manual processes that were often arduous and time consuming,
involving a coordinated effort by users from technology, operations
and business analysis teams.
Razor’s industry standard XML based interface
enabled the simple integration between Razor and the bank’s front office system.
Razor’s highly configurable design allows customers
to fully meet simple or complex risk policy, regulatory and limit management requirements
within the system, providing a single view of all exposure and enabling accurate
and timely risk management consolidated across the whole enterprise.
Razor’s modular design allows clients to select
functional components necessary to support current system requirements and to
supporting ever evolving requirements.
The Results
FHLB Pittsburgh now has a best-practice risk management solution in place
that manages credit exposure on a consolidated, real-time basis across the organization.
This fully integrated system meets the Bank’s current risk management needs
and provides a scalable platform for what the future holds – all achieved on
time and on budget in a 7.5 month timeframe.
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“Our ability to monitor and manage counterparty
exposure will be significantly enhanced through the use of RAZOR, and
we will continue to look for ways to leverage this solution to monitor
our trading and hedging activities.”
Elizabeth Cates,
Chief Credit Officer at FHLBank Pittsburgh
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