The Principia System will provide RBC Capital Markets with full end-to-end management of their municipal investment contract business including the contract bid process, day-to-day portfolio management, risk management, reporting and accounting. Similar to asset-backed and mortgage-backed assets accounts, muni-GICs are subject to frequent fluctuations in the account balance. The ability to manage constantly changing and irregular cash flows, resulting from draws and deposits, is one of the many reasons RBC Capital Markets selected the Principia product.
"Principia offers a total package for our muni-GIC business," states Dominick Carollo, Director, Municipal Financial Products and Investment Agreements at RBC Capital Markets. "Its risk management and analytical tools should provide us with a competitive advantage in rapidly creating new contracts and then managing the product after the contract has been granted."
From a risk management perspective, the Principia System offers a full suite of risk tools including mark-to-market sensitivities and exposures to drawdown and extension risks, which are critical issues in managing a GIC book. To this end, the system maintains a historical time series of amortization and drawdown schedules (both actual and projected).
"Because the muni-GIC business is so operationally-intensive, we require a system that will seamlessly handle all the back office processes and provide extensive audit capabilities," says Carollo. Once a contract is defined within the Principia System, all required reporting and accounting functions are automatically generated, thereby minimizing the possibility for human error. Furthermore, its flexible workflow capabilities provide outstanding control over standard as well as exceptional business processes.
"Muni-GIC providers are among our most advanced users; the typical implementation spans the entire front-to-back office processing spectrum, from deal capture to accounting across a wide range of asset classes," states David Boldon, Global Head of Sales at Principia. "We are delighted to count RBC Capital Markets on our growing list of muni-GIC clients."