Engagement Summary
The Global Banking Organization of a top 10 global investment bank engaged Monticello Consulting Group in late 2019 to lead a change management program and help implement the Security Exchange Commissions (SEC) regulatory requirements for Security-Based Swaps (SBS). The rule establishes recordkeeping, capital and reporting requirements for security-based swap dealers and improve the recordkeeping and reporting requirements for broker-dealers. For Monticello’s client, the rule is expected to impact between 2,000 – 3,000 client relationships, requiring infrastructure updates and the establishment of new business processes. Monticello consultants, with their deep regulatory and change management expertise, were brought in to lead the operations and technology transition to meet the SEC SBS rule and related reporting requirements by the compliance deadline of October 6, 2021.
The Monticello team designed a program governance structure to support multiple workstreams comprised of legal and compliance leads, agile scrum delivery teams, developers and testing teams, as well as operational and business process owners. In addition, Monticello supports senior leadership teams and program sponsors by providing ongoing management communications along with key risks and issues and overall program updates for steering committee decision-makers. The structure below summarizes the program governance implemented by Monticello:
Case Study Detail
PROJECT BACKGROUND
Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act addresses the comprehensive framework for the U.S. financial regulation of derivative products. Under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has regulatory authority over security-based swaps (SBS) and issued the finalized rule (Rule 135d) on January 5th 2018, with a Federal Register effective date of January 16, 2018. The SEC SBS rule addresses requirements around: Security-Based Swap Dealer (SBSD) registration, business conduct, risk mitigation, recordkeeping, transaction reporting, margin, segregation, and capital. Product scope is single-name and narrow index Credit Default Swaps (CDS), single-name and narrow swaps based on securities or loans (e.g., equity swaps, Total Return Swaps on loans). Given that the breadth and complexity of the SEC SBSD rule and corporate transformation that would need to be undertaken, an overarching program governance was initiated to oversee underlying work streams.
ENGAGEMENT OBJECTIVES
Program Management (PM) & Change Management (CM):
Designed and stood up the SEC SBS program governance structure under Corporate Transformation and Change for the Global Banking Organization. Monticello contributed towards the design of the Program Management Office (PMO) to ensure all transformation and changes to the client’s systems and processes were delivered as required by the business, operations, and regulatory mandates. The PMO structure included the following:
Define program workstreams, reporting routines, and ongoing program governance based on regulatory requirements and alignment with business needs.
Identify and manage program assumptions, key issues/risks and internal/external critical dependencies.
Ensure adherence to overall enterprise change management standards.
Ensure stakeholder engagement and buy-in.
Communications & Training:
Developed a strategic communications plan to provide critical updates to stakeholders in a timely fashion. The communication plan established audience, communication objective, and channel of delivery. Critical information was summarized in a dashboard that communicated regulatory updates, program status and key risks, issues and dependencies. In addition, the PMO defined key program metrics to facilitate the decision making process of senior program executives.
BUSINESS VALUE
Monticello’s team, through a continuous partnership with Global Banking technology and operations teams, positioned our client for success in developing the operational and technological capabilities to efficiently meet the SEC regulatory requirements. Monticello brought structure to this complex initiative by leveraging Monticello’s program management frameworks. Our team conveyed strong governance standards, regulatory knowledge and end-to-end process understanding to ensure effective change management while meeting the client’s strategic objectives. This partnership has enabled our clients to retain market share of security-based swaps.
