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BNP Paribas streamlines derivatives clearing tech

The bank signs a 10-year deal with FIS to upgrade its post-trade processes, consolidating other tech vendors.



Paul Saubestre, BNP Paribas

BNP Paribas has signed a 10-year contract with vendor FIS to upgrade its derivatives clearing systems.

As part of the deal, the bank will be consolidating other middle- and back-office vendors as well as some in-house processes.

The early months of 2020, when the COVID-19 pandemic began to shut down global economies, saw record-breaking levels of volatility just as banks’ traders had to operate from home.

Going long, going cloud

“The volatility and volumes of March 2020 left scars,” said Paul Saubestre, head of listed derivatives at BNP Paribas in Hong Kong. While the bank maintained business without halting trading, it saw smaller players suffer. The experience informed its strategy around upgrading its technology.

FIS was already a vendor, and it too has been in a routine upgrade of its products. BNP Paribas made the decision to make FIS its long-term partner and adapt its new cloud-based software.

Whatever the commercial benefits of a long-term contract, Saubestre says the deal sends a signal to the bank’s clients. “If this deal proves one thing, it’s our commitment to serving our clients for the long run,” he said.

FIS introduced its Cleared Derivatives Suite to handle all aspects of processing derivatives trades, both listed and over-the-counter, including trade clearing, reconciliations, position management, cash and collateral management, and margin calculations.

BNP Paribas used older-generation FIS products for back-office work, along with another vendor for the middle-office work, which Saubestre didn’t name. The bank also used in-house software and resources to fill in the gaps.

Saubestre says one reason the bank increased its work with FIS was because of the vendor’s market position. “They’re a dominant player in the market,” Saubestre said.

Moving more activity to cloud comes with extra costs: computing via cloud servers gets more expensive as volumes rise. But Saubestre says the new service creates savings elsewhere. “This drives us to scalability. It lets us provide first-in-class service. It’s all client-centric.”

The FIS suite also brings benefits of streamlining the process, and better integration across the more than 60 markets in which BNP Paribas operates its derivatives business. Consolidation means fewer separate routine software upgrades, so there will be fewer touchpoints that need testing any time a change is required.

Moving to cloud will also make monitoring the system more effective. “It allows more real-time checks rather than end-of-day batches, so we can monitor risks more accurately,” Saubestre said. “That means we can offer clients better [margin] limits and other benefits.”

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