THORNTON MANAGEMENT CONSULTING
Derivatives, Collateral &
Risk Management Solutions in London
A SPECIALIST MANAGEMENT CONSULTING FIRM IN THE FINANCIAL SERVICES SECTOR
About us
OUR PURPOSE
As an established management consulting firm based in London, Thornton Consulting excels in providing tailored solutions within the financial services sector. Specialising in Derivatives and Illiquid Assets, Risk Management Solutions and Collateral Management, our team brings unparalleled industry knowledge to the table. Our expertise spans both buy and sell-side institutions, making us a versatile partner for your needs.
A key differentiator of our model is to ensure any recommendations are sustainable longer term within your organisation without the on-going need for external support. As part of this model, an initial engagement would likely comprise a series of “short sharp” focused assessments led by domain specialists to quickly identify areas likely to yield the most business benefit.
PARTNERS
We collaborate with and oversee legal firms to support effective derivatives model change, providing our clients with an all-inclusive solution.
We pride ourselves on our independence, as we don't align with any specific technology or data providers. Our advice remains impartial, emphasising that technology is a facilitator, not the primary driver of solutions.
ENDORSEMENTS
Discover what industry experts and satisfied clients have to say about our management consulting services and risk management solutions. Read on to explore the endorsements that showcase our commitment to excellence in the world of banking, investment management, and insurance consulting.
CONSULTING
MANAGEMENT CONSULTING
Specialisms
DERIVATIVES AND ILLIQUID ASSET MANAGEMENT
Navigating the world of derivatives and illiquid assets can be a significant drain on limited in-house resource, particularly if specialist expertise is required to achieve specific business objectives. Organisations often struggle with the speed of bringing new instruments to market or modifying existing ones, especially when dealing with a fragmented outsourcing model.
Additionally, derivatives booking and management by third-party administrators differs significantly from the sell-side, posing an industry-wide challenge.
Our management consulting team’s experience spans all parties involved in the derivatives “ecosystem". It effectively co-ordinates complex change across the multiple parties involved (often with very different models), gained from “real-world” experience.
RISK MANAGEMENT SOLUTIONS
Risk Management encompasses various aspects, including market, credit, operational, regulatory, and customer risks.
Many organisations find it challenging to demonstrate compliance with internal policies or stay updated with dynamic market developments.
REGULATORY COMPLIANCE & REPORTING
It's not just about preparing for upcoming changes; it's about maintaining robust oversight and controls to ensure the effectiveness of existing processes. Many of our clients have encountered persistent issues in this area.
In the ever-evolving landscape of regulatory compliance and reporting, it's crucial to stay ahead of the curve. Our management consulting expertise in this field ensures not only readiness for impending changes but also a critical examination of your current processes. We go beyond the surface to identify and resolve persistent issues, providing you with confidence and peace of mind.
RECRUITMENT, TRAINING & EDUCATION
Empowering your existing teams through recruitment and upskilling is key to meeting future business demands.
Reducing reliance on external consultants and contractors, who often take domain knowledge with them when they depart, is crucial.
BENCHMARKING OF THIRD PARTY SERVICES
Obtaining approvals and benchmarking service providers can be a lengthy process.
Demonstrating proactive efforts to deliver positive outcomes for customers is essential.
CONSULTING
MANAGEMENT CONSULTING
Sectors
SELL SIDE
EXECUTING & CLEARING BANKS
From Global Systemically Important Banks (G-SIBs) to regional and local banks supporting trade flows, this sector may require impact analysis and resource augmentation for delivering derivatives systems, controls, and regulatory changes, especially concerning their target buy-side clients.
CLEARING HOUSES (CCPS)
Risk mitigation through member firms, typically broker-dealers, is a significant aspect. Clearers' capabilities vary geographically and are in constant evolution.
Devoting substantial resources to monitor, retain, and deploy best-in-class services for end customers is vital.
INSURANCE
The long-term insurance sector uses derivatives for hedging purposes.
They often outsource to multiple asset managers, resulting in complex operating models that must navigate insurance-specific regulations.
PENSIONS, ENDOWMENT & SOVEREIGN WEALTH FUNDS
Balancing risk appetite with meeting fund objectives is crucial in this sector.
While regulations have lagged behind sell-side and other buy-side managers, the challenge lies in demonstrating sufficient planning and oversight, particularly in volatile times.
CONSULTING
MANAGEMENT CONSULTING
Case studies
UNCLEARED MARGIN RULES (UMR)
A Phase 6 asset owner with multiple group legal entities and external fund managers (EFMs) needed to achieve multiple objectives through the same delivery: consolidate collateral management through a single provider, negotiate new ISDA/CSAs and migrate trades to those new agreements, overlay initial margin requirements through the journey from threshold monitoring (“forbearance”) through to being fully documented and posting collateral.
All of this was managed and delivered whilst minimising disruption to trading requirements, front office time and building out operations capabilities and resourcing.
LIBOR TRANSITION
A US Dollar based bank needed to identify impacts across its whole business model with shifting sands as the market for replacement benchmark (SOFR) was not sufficiently developed. A highly technical problem for the bank’s value proposition as a leader of trade financing in the local region across client product pricing, legal documentation, technology/operations and financial/regulatory reporting.
During Covid we worked remotely to produce an end-to-end impact analysis and provided the client with a detailed delivery plan for the client to deliver internally. This saved them significant costs versus a fully outsourced consultancy delivery.
INVESTMENT MANAGER TRANSITION
We supported an asset owner to conduct an RFP process, appoint new investment managers and undertake the journey to migrate to the new suppliers. This includes the negotiation of Investment Management Agreements (IMAs), the definition, development, and testing of detailed deliverables, and the seamless transition of assets and intricate reporting requirements.
Our approach was designed to minimise disruptions to trading operations and the valuable front office time through deep sector and asset technical knowledge.
ILLIQUID LOAN VALUATION MODEL
Against the backdrop of heightened regulatory scrutiny within the industry, an asset owner had already embarked on a mission to enhance their capabilities and strengthen controls to facilitate business scalability. In response, the client assembled an extensive multi-consultancy team with diverse skill sets, including actuarial expertise.
Our distinct contribution to this effort was concentrated on reshaping the operating model. This encompassed comprehensive management of the outsourced administrator, the development of a robust risk management framework, oversight of technology implementation, design of the middle office, and execution of interim management and recruitment efforts.
PROPOSITIONS TO INVESTMENTS (FUND STRUCTURES)
Insurance companies grappling with multiple legacy customer administration systems often encounter a common challenge: the difficulty of connecting customers' holdings in propositions to investments, a phenomenon we term "fund structures". This complexity hinders implementation of fund rationalizations, inflates the expenses associated with manual analysis and can lead to communication oversights with customers.
To secure funding we crafted a concise problem statement. We then executed a tactical plan with the development of a proof of concept, which was subsequently seamlessly migrated to a third-party cloud-based solution. Our team took charge of the procurement process, established a clear data ownership model and a dedicated reference data team embedded into daily operations.
