E-finance-lab at the House of Finance : about us

The financial services industry is believed to be on the verge of a dramatic [r]evolution. A substantial redesign of its value chains aimed at reducing costs, providing more efficient and flexible services and enabling new products and revenue streams is imminent. But there seems to be no clear migration path nor goal which can cast light on the question where the finance industry and its various players will be and should be in a decade from now. The mission of the E-Finance Lab is the development and application of research methodologies in the financial industry that promote and assess how business strategies and structures are shared and supported by strategies and structures of information systems. Important challenges include the design of smart production infrastructures, the development and evaluation of advantageous sourcing strategies and smart selling concepts to enable new revenue streams for financial service providers in the future. Overall, our goal is to contribute methods and views to the realignment of the E-Finance value chain. ..

Perspectives on information and supply chains within investment banking

Supply chain concepts are usually confined to industries where there are core sourcing, manufacture and delivery processes. These industries are usually to be found within the industrial products, aerospace, automotive, chemical and pharmaceutical sectors. Supply Chain Management (SCM) concepts, have not necessarily been associated with financial services, apart from concepts of information management and process flow, in the loosest sense. This paper attempts to describe how supply chain concepts are very much an inherent part of the financial services process landscape, with particular reference to the field of investment banking. In doing so, the paper explores IT/IS issues impacting within the investment banking industry, focussing on the requirements for efficient distribution of sales and research data. Following this, the authors extend concepts of supply chain and information management, to realise the concept of an Investment Banking Information Supply Chain (IBISC)

The effects of globalisation of financial services on banking industry and stock market: an Algerian case study

Since the mid-1980s, Algeria has embarked on a programme of comprehensive financial liberalisation to establish a market-oriented financial system, and to develop the role of the Algiers Stock Exchange in the mobilisation of financial resources. The transition from a centrally planned to a market-oriented economy meant fewer regulatory barriers towards local and foreign banks. This study demonstrates that financial liberalisation is the main force that drives the globalisation of financial services, followed by financial innovations and the Internet. Globalisation has affected the performance of the two prevalent banking models in Algeria: interest based (conventional) and non- interest-based (Islamic). The benchmarks used to assess banking performance are: competition, profitability and efficiency. Quantitative and qualitative analyses show a direct link between banking efficiency and the globalisation of financial services. The study concludes that globalisation has more advantages than disadvantages to the Algerian banking sector and the Algiers Stock Exchange. The elimination of regulatory barriers has enabled state-owned banks to improve the quality of their services and to use more advanced information technologies. Private and foreign banks are also involved in the modernisation of the Algerian banking industry by launching innovative financial products and attracting local and foreign capital. However, this project emphasises that the removal of remaining regulatory obstacles would enable banks to benefit fully from the process of financial liberalisation, and to be active institutions in the financial market. Moreover, opening the Algiers Stock Exchange to large domestic and foreign companies would attract capital investments and boost equity trading in Algeria

Improved eBusiness Treasury Risk Management using Intelligent Agents: Increasing Returns, Controlling Risk

Following the global economic downturn and a collapse in international equity markets, many financial institutions and corporations have sought the higher returns associated with higher risk from trading in foreign exchange derivatives. These derivatives have become increasingly complex to the point where few specialists are able to accurately determine the level of exposure. Top traders seek high rewards for their successful investments. Rogue traders seek high rewards by concealing their unsuccessful gambling, sometimes to the extent of endangering the viability of their employers. Current technology copes poorly with dynamically changing business requirements and conditions so there is little technological support available for organizations sensitized by reports of rogue trading and increasingly obliged by financial regulators to improve their risk management practices. This paper proposes a risk management framework that can support FX derivative monitoring and trading based on the Williams-Elliot Agent Architecture. The framework uses agent technologies for improved management of treasury risk by continuous monitoring of all transactions across an organisation; continuous evaluation of exposures compared with prescribed parameters across an organisation; instantaneous reporting to senior management where trading begins to approach or violates the parameters. Rigorous examples of typical transactions illustrate how intelligent agents can be used to monitor risk and to make trades within a powerful risk modelling and management framework

The effects of Multi bank trading platforms on the foreign exchange market: the case of South Africa

Thesis submitted in fulfilment of the requirements for the degree of Master of Management in Finance and Investment in the Faculty of commerce law and management Wits Business School at University of WitwatersrandSince the floating of Foreign Exchange rates in the 1970’s, the global foreign exchange market has seen a transformation and evolution led largely by the invention of Electronic Trading. The Foreign Exchange market, which was previously opaque, has now been transformed in a manner that now makes the market cheaper to transact in as well as being more transparent than it was previously. This paper analyses the impact of Foreign Exchange Electronic Trading Platforms, with a focus on Multi Bank Trading Platforms, by companies in South Africa. Though this topic has been written about quite a lot from a global or developed market perspective, not much research has been done on this topic in the South African context. A corporate online survey questionnaire was sent out to more than 200 companies operating in South Africa to generate responses with regards to the respective companies views, opinions and beliefs with regards to Electronic Trading. Similarly, a bank online survey questionnaire was sent to all banks in South Africa who can buy and sell Foreign Exchange to corporates in order to gauge the respective banks’ views, opinions and beliefs with regards to Electronic Trading. The research suggests that Multi Bank Trading Platforms would be a welcome addition to treasury departments of companies operating in South Africa. Though Straight Through Processing is the desired state in using Multi Bank Trading Platforms, usage of the platforms without implementing Straight Through Processing is beneficial as the platforms lead to increased price transparency, better audit trail in terms of checking that FX deals are being concluded at the best possible rate, cost reductions, reductions in process risk and efficiency gains when transacting Foreign Exchange deals. The purported disadvantages of the platforms that they increase volatility, that they negatively affect liquidity and that they are bad for the FX market structure seem to be invalid with a majority of corporates and banks disagreeing with the purported disadvantages. Keywords: Foreign Exchange, Electronic Trading, Multi Bank Trading Platforms, Straight Through Processing.GR201

Developing financial markets

Central banks have an interest in well-functioning money markets, foreign exchange markets, and secondary markets for government securities. Efficient financial markets support both the monetary stability and financial stability goals of the central bank; and more broadly should benefit economic development. Well-functioning money markets support the transmission of an interest-rate based monetary policy and can provide information to the central bank. Liquid foreign exchange markets can help to stabilise the exchange rate and reduce transaction costs in cross-border trade and transfers. The development of these markets will support the later introduction of related financial markets such as repo and derivatives, which should in turn lead to improved risk management and financial stability, thereby enhancing economic welfare. Liquidity and price stability in short-term interest rate markets can support market-making, and thus liquidity in the securities markets. This in turn should reduce the cost of issuance for the government and other fixed-interest issuers. Indeed the secondary market for government securities may act as a catalyst for wider fixed income securities markets development: its yield curve is the benchmark for the pricing of the private sector credit. The advancement of these markets should be accompanied by the development of the appropriate market infrastructure such as robust payment and settlement systems and supportive legal framework. Many developing economies are characterised by illiquidity in these core markets, and in most cases a surplus of central bank money, in the form of excess commercial bank balances with the central bank. This handbook will look at what the central bank, and the Ministry of Finance as issuer of government securities, could do (and in some cases should not do) in support of the development of these markets.Developing financial markets

Global Capital Markets - An Updated Profile

More than two decades after the beginning of the financial revolution, globalization of capital flows still attracts considerable attention, from both practitioners and academics. The aim of this paper is to contribute to understanding of some aspects of the global capital scene, as well as to emphasise certain developments which might illustrate its changing profile. Several fundamental perspectives profile the global capital market. A quantitative review provides a sense of sheer volumes, trends, origins and destinations of capital flows; an assessment of the global capital markets degree of integration follows. The emergence of new (types of) actors is another important aspect of the global processes, while illustrations of new market products and emerging segments may add new perspectives on the profile of the global capital market. Finally, the paper concludes with a brief overview of digitalisation of the financial supply chain.Capital markets, Innovation, Electronic trading

Future Trends

After reading this chapter you will be able to: - Review the changes occurring in collections and disbursements - Appreciate concerns relating to banking relationships and credit rationing - Understand disaster recovery and contingency planning issues - Evaluate the trends in treasury organization