• Current market practice for FX credit risk management varies widely. Although post-trade and overnight processes for full risk analysis are fairly standardised, the technology used is varied and often based on legacy systems.

• Existent pre-trade checks are not always based on real-time calculation, mostly widely based only on settlement risk and then post-trade marked to market generally against the previous day's closing.

• The current challenges include the latency added as pre-deal checks are conducted. Any product that reduces latency and avoids limiting the market is seen as important. This is a greater focus than conformity of processes to existing core credit processes that may well be in need of overhaul.

• Sell-sides face problems with carve-outs and allocation of lines across various channels and other problems with their existing systems in accounting for netting or roll-over trades. Similarly, current systems often fail to accurately account for lessened risks in roll-overs or complex risk in structured trades. Again, solving these issues would add value.

• Respondents emphasised possession of legacy credit risk management systems that would require replacement in preference for newer systems that could accommodate multi-asset class risk assessment as well as faster pre-deal checks based on real-time calculations. This, for several sell-sides, is a large undertaking and not a current concern.

• Developing a front-office credit solution that improves areas noted above would be desirable but constitute a major IT project that was generally a lower priority than other front-office e-commerce and trading projects or needed to be addressed only after (or at best in concert with) addressing the core credit system revision.

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