During the mid-2000s, the FHLB of Des Moines faced the dilemma of creating and implementing an integrated front-to-back FAS 133 solution. After grappling with it for some time, they discovered that patchwork solutions would not accommodate their business needs and created an unsustainable model. By April 2008, the decision was made to create a solid solution and Epsilon was chosen to get the job done. The task included:

• Creating and implementing a fully customized front-to-back integrated FAS 133 solution
• Removing the need for external consultants by having the solution depend entirely on constructs the bank could manage on its own
• Maximizing automation while providing user feedback the whole way through

To this day, Epsilon’s FAS 133 solution is an industry leader, setting an impressive standard that major trading platforms struggle to achieve. The solution was completed by December 2008, less than a year after work began. Epsilon’s business expertise and close collaboration with the FHLB of Des Moines brought the solution live in April 2009, just one year later. Tailored specifically towards for the needs of the FHLB of Des Moines, some of its notable features are:

• Automated FAS 133 accounting tasks, including basic daily accounting and complex monthly tasks such as HET and adjustment entries
• Increased user efficiency by reducing the number of required “clicks” for tasks from 50+ to under 10
• Automatic capture of derivatives and hedged items, and a simple means of creating/maintaining hedge relationships between them
• Complete integration with existing systems

Situation:

Following the 2008 financial crisis and the subsequent passage of Dodd-Frank regulations in 2010, financial institutions began seeking assistance in addressing the hurdles presented to them. A major U.S. bank had only four month to design, implement and go-live with a solution to comply with Dodd-Frank in 2012. It was critical for the bank to partner up with someone who can not only undertake a myriad of responsibility under extremely tight deadline and budget, but also someone who can think outside of the box, objectively assess various aspects and communicate with honesty to the bank. Epsilon was chosen by a major U.S. bank as a collaborative partner to:

• Gain an in-depth understanding of Dodd-Frank implication specifically to bank’s processes for various groups and translate how it would impact the bank long term
• Create a user-friendly, easy to maintain solution to comply with Dodd-Frank clearing regulations
• Increase efficiency – minimize manual processes & simplify daily front and middle office tasks
• Mitigate risks
• Implement Straight-Through-Processing (STP).

Epsilon’s Story:

We constructed a customized solution that met and surpassed the needs of the bank by closely working with various teams, including operations, trading, accounting and finance. In addition, we coordinated testing and developed a go-live strategy. Solution went live on budget and within four months with little to no maintenance going forward. The outcome of Epsilon’s solution included:

• Fully Automated clearing process for derivatives (Swaps, Swaptions, Bonds)
• Easy to navigate, template driven, streamlined interface
• Customized analytics and messaging to aid decision making process
• Automated MarkIt trader manager interface
• Configurable STP to eliminate numerous manual process

Long term Impact:

Consequently, the solution designed by Epsilon impacted an entire organization. Epsilon’s unique approach to engage with the client as a partner and not as consultants led to the creation of a solution that goes beyond its basics and came in with significant cost savings to the bank. TCCS generated a sharp increase in time efficiency, a significant reduction in the amount of errors over time and led to a reasonably improved bottom line due to maximizing upon bank’s existing capabilities, along with a tight integration with bank’s needs.

Technology:

• TCL
• Web Services
• Oracle