Double Effect knowledge partner and presenter at the IIR EMIR conferenceFriday 10 May 2013
On May 28 and 29 the Institute for International Research (IIR) Conference Derivatives and Central Clearing will take place in Amersfoort, the Netherlands. During this two-day seminar, the focus will be on the impact of EMIR and subsequent threats and opportunities for financial and non-financial counterparties. The main topics are:
- EMIR compliancy and the overlap of EMIR with Dodd-Frank, Basel III/CRD IV and MiFID II
- Collateral requirements and risks related to Central Clearing
- Selection and negotiation with Clearing Brokers
- Timely confirmation, daily valuation, reconciliation and compression of portfolios; get your organisation ready!
Double Effect is one of the two knowledge partners of this seminar. As consulting partner for business improvement in the heart of financial services, Double Effect has developed an extensive knowledge base and experience with respect to financial markets regulation including EMIR. Joris Hillebrand, Senior Consultant and Regulation practice lead at Double Effect, will open the seminar and functions as chairman of the day. Please read a pre-conference interview (in Dutch) with Joris. Selwyn Halbertsma, Senior Consultant at Double Effect, will host a workshop for non-financials on implementing EMIR, while taking into account the relation to MiFID II and REMIT requirements.
Synechron acquires Double EffectWednesday 24 April 2013
Acquisition creates a global full service company with a mix of management and technology consulting capabilities
New York/Pune, April 24, 2013: SYNECHRON, one of the fastest growing global IT companies focused on the financial services industry, today announced a definitive agreement to acquire Double Effect, an Amsterdam, Singapore, and Frankfurt based management consultancy specialized in strategy translation and implementation. This acquisition will enable Synechron to add Double Effect’s management consulting expertise to its pre-eminent strengths and leadership in high-end technology consulting and delivery. The development underscores a game-changing shift for the industry that will usher a new trend of delivering true integrated management and technology consulting that impact business strategies and accelerate growth of financial institutions.
Commenting on the development, Faisal Husain, Founder and CEO, Synechron said, “The acquisition of Double Effect, strengthens our ambition of being a company uniquely placed to strategically guide and transform financial institutions through high end management and technology consulting capabilities. Apart from lending strategic skill-sets, the acquisition will also provide us with access to markets such as Europe and emerging markets like Asia Pacific (APAC) where Double Effect has a strong presence. Additionally, our common values of agility and focus on domain intensive consulting makes this acquisition a perfect culture fit. We are confident that their team will be a great asset to us.”
Double Effect will operate as an independent company after the acquisition and will continue to take the joint value proposition to its customers. Speaking about the acquisition, Bas Heijnen & Pablo van den Bosch, Founders of Double Effect said, “Synechron’s impressive credentials and track history in the financial services domain made them the clear choice for us. The financial services industry is at a critical juncture and our association with Synechron will augur well in addressing the business imperatives of these companies. Being a part of the Synechron team will also strongly complement, synergies our existing service offerings and catapult us to our next phase of growth.”
Synechron expects the acquisition to further accelerate its fast-track growth. The company has been growing at a CAGR rate of over 35% for the past six years to become a USD 200 mn annualized revenue entity. It has emerged as amongst the fastest growing technology consulting companies providing a range of software solutions with a micro verticalized focus in Capital Markets, Insurance, Mortgage Banking, Energy and Commodities, and Digital Media.
In the past, Synechron has followed a joint strategy of organic and inorganic growth. Over the last six years, the company made three acquisitions namely 110 Technologies – a specialist provider of Testing services to Investment Banks, SysCore Solutions - an enterprise technology strategy & data architecture consulting firm and Esquire Systems - an IT consulting & services company. This has enabled the company to gain higher level strategic end-to-end service offerings, a solid talent base, and access across specific verticals and markets.
Synechron, founded in 2001, is globally a 4000+ professionals company, headquartered in New York. It has presence across the US, Canada, UK, The Netherlands, UAE, Japan, Hong Kong, Singapore, and state-of-the-art Development Centers based in Pune, India. Synechron specializes in Banking, Insurance and Financial Technology services and its value proposition lies in its global delivery model, harnessing industry expertise from established markets such as New York, London and Tokyo with complementing technical edge through its development centers in India. For more information visit www.synechron.com.
About Double Effect
Double Effect is a consultancy agency specialized in strategy translation and implementation in the financial services industry. Founded in 2003, Double Effect has a team of 76 consultants and presence in Amsterdam, Singapore and Frankfurt. Unlike any other consultancy firm, Double Effect can guide financial institutions through the process of change. The in-depth knowledge and sound understanding of strategy, product, and operational processes of Double Effect’s consultants enables the optimization of their clients’ business (banks, exchanges, insurance and asset management companies). With extensive experience and solid process, technology and regulatory knowledge, Double Effect translates strategic issues and concepts into a practical implementation approach, and ensures results being firmly embedded. For more information visit www.doubleeffect.com.
Faisal Husain, Founder and CEO of Synechron, announces acquisition of Double Effect
Working paper on the valuation of products with funding costs and liquidity riskTuesday 26 March 2013
Double Effect’s Director Risk, Bert-Jan Nauta, has extended his previous work on the impact of funding costs on the value of derivatives.
Bert-Jan Nauta shows in his new working paper that also when counterparty risk is included under the elastic assumption the Funding Valuation Adjustment (FVA) is zero. He also assesses the impact of liquidity risk on the valuation of derivatives. The liquidity risk has a similar impact on derivatives’ prices as funding costs under the inelastic funding assumption. However the important difference is that the liquidity spread is product dependent. A nice result is that the relation between liquidity spreads of two products is given by the liquidation values of the products under a liquidity stress event. Another interesting result is the extension to a full non-linear expression for the CVA- and DVA-terms, instead of just the linear (in terms of exposure) expression.
Double Effect's first student seminar was a great success!Friday 1 March 2013
We are very pleased to announce that our first student seminar “why simple things have become complex”, organised by Double Effect on Friday February 15, was a great success. The seminar was targeted at quantitative students and included guest speakers from universities and the industry. According to student attendance and positive reactions from both guest speakers and students, we can look back on a very successful afternoon!
The kickoff of the seminar, held at the Duisenberg School of Finance was performed by one of Double Effects partners, Martijn Oostenrijk, who gave a short introduction about consulting and what we do at Double Effect. Risk Director Bert-Jan Nauta continued about the Risk division of Double Effect and informed students about quantitative internship opportunities.
One of the organisers, Martin Koudstaal, announced the first speaker, Prof. dr. ir. Michel Vellekoop from the UvA. The presentation was titled “Pricing principles in incomplete markets”. He presented a utility function-approach for the valuation of claims, instead of a replication-approach. This can be especially useful in incomplete markets where hedging strategies are not possible, e.g. wage indexed pension liabilities.
The second speaker, Dr. Berend Roorda introduced a theoretical insight into backward recursive pricing and argued that risk aversion cannot be considered constant over time and should be treated accordingly. He presented different methods to take inconsistent risk aversion into account, which unfortunately comes at the cost of simplicity. After these two academic speakers, the audience got the opportunity to get a coffee during a short break. The second part included two speakers from the industry.
Dr. Drona Kandhai, Head of Front-Office Quantitative Analytics at ING, emphasized practical aspects in his talk titled “How did CVA turn plain vanilla swaps into one of the most exotic derivatives?”. In short, the Credit Value Adjustment (CVA) is the market value of counterparty credit risk. This is the difference between the risk-free portfolio value and the true portfolio market value that takes into account the possibility of counterparty’s default. He presented difficulties that can be faced in different methods to calculate the CVA of a derivative. Special focus was on practical issues, of which an important shortcoming is simply a lack of computational power.
Last but not least, our colleague and Risk expert Jaroslav Krystul discussed a method to price Interest Rate Derivatives by using Multi-Index curve group construction. He made a link with practice by showing current developments in spreads and showed the impact of the crisis. This nicely illustrated the need to take into account the increased magnitude and volatility of the OIS-Libor spread (proxy for interbank credit and liquidity risk) that is observed since the crisis.
After all these “not-so-simple”, i.e. complex matters it was time for a drink. The closing drink was a nice opportunity to talk with the students and professors about our work and the presented topics. Both students and speakers responded very positive to our intention of linking practice to theory. We can look back on a very interesting afternoon and look forward to next year’s seminar!
Meeting of Minds Private Banking – The Follow Up Breakfast SessionThursday 14 February 2013
After the fifth Meeting of Minds (MoM) for the Asia Pacific Private Banks and Multi Family Offices on 4 Oct 2012, a follow up session was organised on 17 Jan 2013 to discuss possible solutions to the issues raised during the last meeting and to develop a potential action plan among the participants. Among the participants were Chief Executive Officers of private banks, family offices, external asset managers and independent financial advisory firms across the Asia Pacific region.
Double Effect successfully collaborated with the Owen James Group again to moderate discussions along two themes that have strong resonance in the private banking practice. The two themes were around:
- Key market trends and their impact on various business models
- Regulation: Improving the competitiveness of the industry as well as measuring and tackling the rising cost of regulation
Using our subject expertise in these areas to develop a matrix poster, Double Effect facilitated an engaging and in-depth debate among participants. Using a well prepared visual dashboard as a framework to lead the participants into sharing their experiences, views and ideas which in turn contributed towards the knowledge building process. The positive reviews received have been encouraging and Double Effect will continue to build on these discussions in April during the next MoM in Hong Kong.
Seminar: why simple things have become complexWednesday 19 December 2012
In association with the Duisenberg school of finance, Double Effect is organising a seminar for quantitative students with an interest in finance. This one-day event is hosted by Duisenberg and will include four speakers, both from the industry and academic world. The seminar is titled “Why simple things have become complex” and will address several recent developments within quantitative finance. The topics are approached from different perspectives; practice vs. theory. This should provide an interesting mix of viewpoints, as one of the speakers, Michel Vellekoop states it: “The gap between theory and practice usually turns out to be larger in practice than in theory”.
The guest speakers include Michel Vellekoop, who is a professor at the UvA and will talk about pricing principles in incomplete markets. Berend Roorda, associate professor at the University of Twente will present and motivate the concept of consistent risk aversion and its implications for pricing. Drona Kandhai, head of Model Validations at ING will explain how the Credit Valuation Adjustment influenced the derivatives market. Jaroslav Krystul, consultant at Double Effect, will discuss rate curves construction techniques and related risk management issues.
The seminar is held on Friday, February 15th, from 13.00 to 17.00 (drinks afterwards) at the Duisenberg school of finance, located at the Gustav Mahlerplein 117 in Amsterdam.
- 13.00 – 13.15: Welcome by Double Effect
- 13.15 – 14.00: Pricing principles in incomplete markets (Prof. dr. ir. Michel Vellekoop)
- 14.00 – 14.45: Consistent risk aversion and its implications for backward recursive pricing (Dr. Berend Roorda)
- 14.45 – 15.00: Coffee Break
- 15.00 – 15.45: How did CVA turn plain vanilla swaps into one of the most exotic derivatives? (Dr. Drona Kandhai)
- 15.45 – 16.30: Multi-index curve group construction for pricing interest rate derivatives (Dr. Jaroslav Krystul)
- 16.30 – 17.00: Discussion and Closure.
- 17.00 – 18.00: Drinks with speakers and Industry professionals
Meeting of Minds for Private Banking in SingaporeWednesday 24 October 2012
The fifth Meeting of Minds for the Asia Pacific Private Banks and Multi Family Offices took place on 4 October at the Fullerton Hotel in Singapore. This event, organised by the Owen James Group, brings together a broad audience of Chief Executive Officers and Chief Investment Officers across the Singapore wealth management industry to discuss trends, challenges and opportunities. The event was very well attended by representatives of private banks, family offices, external asset managers and independent financial advisory firms.
For the first time, Double Effect collaborated with Owen James to moderate some of the 11 round table sessions with over 50 decision makers in the industry, increasing our profile in the Singapore wealth management market. Specifically, Double Effect moderated two sessions on the themes:
- "Effective deployment of capital, exploring the ideal wealth management model": focusing on the profitability and balance sheet challenges in the industry.
- "The implications of the FAIR on the private banking industry": FAIR is the Financial Advisory Industry Review conducted by the Monetary Authority of Singapore, comparable to the RDR in the UK, FOFA in Australia and MiFID II in Europe.
Lively debates over three rounds of round table sessions and highly engaging keynote addresses by the sponsors and selected speakers made for a very successful event, receiving positive feedback broadly across the participants. Owen James Group will continue with this sequence of successful events, and we aim to build on our first, successful collaboration.
Happy first birthday to our Singapore office!Thursday 27 September 2012
It has been one year since Double Effect opened its first international office in Singapore. Asia’s little red dot was an obvious choice given its regional position at the heart of many of our client’s growth strategy.
The same strategy holds true for Double Effect. The office grew from two to eight people, with a strong ambition to more than double this number in the coming year. To attract fresh new talents, we continue to participate and promote our brand in Singapore’s top universities – NUS, NTU, and SMU. Comparatively, our client coverage has increased. We have extended and even expanded the international scope of work with existing clients, accomplished major milestones on a pioneering project with an exchange, and our pipeline is only gaining traction.
Support coming from the rest of the Amsterdam team is phenomenal at Double Effect. Our two offices maintain a collaborative relationship to share in the knowledge and experience achieved over the years. The induction programme in Amsterdam and joint trip was the perfect chance to get to know our company partners and colleagues. We even look forward to meeting everyone again during our next yearly outing in 2013 to mark Double Effect’s 10th year anniversary!
As we continue forward in our journey, our partner could not have put it better by saying that the proudest moments come from the toughest challenges. May the coming years bring more success and prosperity. Happy first year anniversary to Double Effect Singapore!
Working paper on funding costs and the valuation of derivativesMonday 24 September 2012
Double Effect Director Risk Bert-Jan Nauta contributes to the current debate in the literature and within banks about the inclusion and impact of funding costs on the value of derivatives. In analogue to the Credit and Debit Value Adjustment (CVA and DVA) the impact of funding cost is referred to as Funding Value Adjustment (FVA).
Bert-Jan Nauta shows in his working paper that the FVA depends on the assumption of fixed funding costs. If funding costs are assumed to be elastic, in the sense that funding costs immediately react to each new transaction, it is shown that the FVA is zero. It is further argued that the elastic assumption is more appropriate for the valuation of derivatives.
Double Effect speaker at the congress ‘Future of payments’Wednesday 1 August 2012
On Tuesday June 19, 2012 the 13th edition of the congress ‘Future of Payments’ took place. Double Effect was one of the sponsoring partners of this largest payments event in the Netherlands. Also, Dennis Versteeg facilitated a break-out session specifically aimed at corporates who have just started (or are about to start) their SEPA-project, on the following topic: ‘SEPA, driver for cost savings’.
A short summary:
SEPA requires a substantial investment from both the supply-side and the demand-side of payment products. In 2012 Double Effect interviewed a number of large payers and collectors to determine which, if any, advantages can be achieved from SEPA as well. Furthermore, their experiences with the SEPA-implementation were noted.
Currently, the market is headed for a negative cost scenario of -€42 billion due to the implementation of SEPA. To avoid this negative outlook, corporate organisations need to be far more involved in the development of new SEPA-products and services. For individual companies the advice is to start with SEPA as soon as possible, taking into account the mentioned possibilities for cost savings and the lessons learned/pitfalls experienced by the early adopters. Do make use of the experiences available in the market on SEPA-implementations instead of re-inventing the wheel!