What we do

Our advice ranges from strategic counsel to practical implementation. We often work with local consultants and/or other experts in order to best meet the needs of the client. They appreciate receiving advice that they can effectively implement and that makes a difference for their market.

Capital market development

We advise countries on developing their capital markets, reforming their government bond markets and strengthening their financial centres.

We provide an overall perspective, encompassing the objectives of government and market users, the design of market infrastructure and the legal and regulatory environment.

We have prepared Capital Market Masterplans for a number of countries and have advised on the reform of several emerging market government bond markets.

Case studies:

We were engaged to prepare a Capital Markets Masterplan (CMMP) for a frontier market country in Africa.

The objective of preparing a CMMP for this country was to enable capital market finance to play a stronger role in supporting development:

- by raising equity and long-term debt finance for businesses
- by providing a wider range of investment opportunities for savers
- by attracting foreign investment
- by creating employment

We therefore looked for the factors that were holding back greater use of the capital markets. Some of these factors were relatively visible and technical, for example relating to tax and regulations. Many of them, however, were less visible. 

For example, although there were many successful private companies, few of them understood the potential benefits of capital market finance or had the financial reporting and governance structures in place to be able to take advantage of it. 

Our analysis therefore led us to review the arrangements for applying financial reporting and corporate governance standards and the capacity of the relevant professions to support businesses in doing so.

The final CMMP therefore covered a broad range of topics: 
-  recommended changes to the market infrastructure 
-  recommended changes to laws and regulations
-  recommendations for expanded professional training for accountants, lawyers, financial analysts and corporate financiers and 
-  a programme to raise capital market awareness among legislators and opinion-formers.

Throughout the process of developing the CMMP we worked closely with a steering committee of local market practitioners to ensure that our analysis and recommendations were in line with their needs and could be implemented.

This case study illustrates how our wide experience enables us to look at a problem from both a technical and a broad perspective and how we work closely with local market participants to develop solutions that are a good fit for a particular market.

We were engaged to advise the Central Bank of Egypt on the reform of the Egyptian government securities market. The project covered the three fundamental building blocks of any market i.e. issuance, through the auction system, trading through an Electronic Trading Platform and settlement through the complete modernisation of the Central Securities Depository.

Following agreement on the market model, our work included

- advice on a new market structure
- defining the role of Primary Dealers
- developing new auction and secondary market trading mechanisms
- building a new CSD with collateral management arrangements, including the legal and business aspects of establishing a new CSD company
- assistance with specification, procurement and implementation of the necessary systems
- implementation and market preparation

A key aspect throughout the project was maintaining stakeholder engagement and participation. The new CSD is now fully operational for Treasury Bills and will shortly be operational for Bonds.

This case study demonstrates our ability to advise on the overall structure of a market from issuance to settlement as well as on the detailed requirements of each segment.

Market infrastructure development

We have assisted on the design and operation of market infrastructure by defining strategy and structure, preparing technical specifications, supporting the procurement process and implementation of the design or products and finally delivering customised training to market participants.

We have aided financial market infrastructures preparing their Principles for Financial Market Infrastructures (PFMI) assessments for private or public submission.

We have advised on the development of a new CCP from scratch through to live status, have performed cost benefit analyses for new CCPs and supported new CSDs in emerging markets.

Case studies:

We were engaged by a Middle East central securities depository (CSD) to aid them in the creation of a new CCP for their market.

The objective of the CSD was to have the CCP live prior to new financial instruments being introduced in the market.

We worked with our client to define the requirements of the CCP, the instruments to be cleared, the structure of the market, the approach to risk management, the ownership and governance structure and the legal and regulatory framework. A key document was the Business Description, which presented the essential features in a way that could be used in discussions with market participants and regulators.

After discussing their overall needs, we prepared a financial budget, including the staffing requirements and necessary capitalisation.

We then detailed the steps needed to bring the CCP live and worked with the client to deliver it. This included creating the specifications and RFP for software suppliers and supporting the client in selecting the vendor and negotiating the contract. We also participated in discussions with the Central Bank on the regulatory framework and drafted CCP rules including margin requirements and provided initial training for staff for the CCP. 
The CCP is now operational and ready to receive trades when the new trading platform is established.

This case study illustrates how we can take a project from the initial concept through to technical implementation and can support our client at all stages of the process.

We were engaged by the European Bank for Reconstruction and Development (EBRD) together with the Securities Commission of an East European market to conduct a cost-benefit analysis for the potential introduction of CCP services in compliance with international standards, such as the Principles for Financial Market Infrastructures (PFMI). 

After detailed consultation with all relevant stakeholders, we prepared our cost-benefit analysis report based on EU methodology. We reviewed both quantitative and qualitative measures and identified advantages and disadvantages of implementing different CCP models. 

To provide a basis for decision-making, we prepared a matrix of possible outcomes based on a range of assumptions. These assumptions included different clearing models, different scenarios for the potential demand for a CCP based on projections of market growth and the potential costs of implementing a CCP. The conclusions included NPVs for the project with different discount rates as well as an assessment of the wider costs and benefits for financial markets and the economy of the country. 

While we strongly believe that a CCP is a key part of any financial market infrastructure, it is not by itself a solution to systemic or market related issues. There are a number of conditions that need to be met before a CCP can be implemented successfully in any market, including 

- a supportive legal and regulatory framework 
- liquid and transparent markets
- an efficient and transparent price discovery process
- market participants capable of acting as clearing members
- a supportive ownership and capital structure for the potential CCP

As a conclusion, we prepared a list of elements requiring progress and developed a high-level overview of a roadmap to be implemented. 

This case study illustrates our ability to evaluate development of a new market infrastructure under different market conditions both taking quantitative and qualitative aspects and at the same time, for the sake of successful implementation, to advise the responsible key decision makers about the necessary steps before such infrastructure investments can take place.

Research and Strategic advice

We prepare research papers on current topics of market structure, either confidential or for publication.

Examples include reports published by the European Commission on the application of CCP clearing to pension funds in Europe and for the City of London on the development of financial centres.

We give independent, confidential counsel and guidance to executives to aid discussions with their board directors on future strategy.

We have prepared confidential research for the Directors of a CSD to help them evaluate their
strategic options and advised CEOs of Exchanges on major issues of modernisation and strategic direction.

Published reports we have prepared are available here.