Wind-Down Plan

SUMMARY

The client, a multi-asset broker, who primarily provides execution, clearing and prime brokerage services, was seeking assistance with the development of the Wind-Down Plan (WDP), an FCA requirement. Following an SREP review by the FCA, the broker was required to develop a detailed WDP within a two-month timeframe.

Due to the size of the activities of the Broker and the number of stakeholders involved, it made it difficult to receive the right amount of information and estimate the resources required for a wind-down scenario.

Avantage Reply conducted workshops to collect the information and write the Wind-Down Plan. The resulting report was a significant improvement with an accurate estimation of the requirements for an orderly wind-down.

THE CHALLENGE

The FCA requires that the broker identify the steps and resources needed for a wind-down of its business, evaluates the consequences and risks of a wind-down, and considers how the broker would mitigate these risks.

The client requested that Avantage Reply create the Wind-Down Plan based on inputs and workshops with the various teams, including:

1. A list of plausible scenarios that could lead the firm to no longer being viable;
2. A detailed plan that can be used to orderly wind down the firm if the Board of Directors has decided this is necessary;
3. An assessment of the resources needed during the wind-down period, both financial and non-financial resources;
4. Identify any risks that would arise as a result of a wind-down, such as significant consumer detriment or adverse market impact, and how to mitigate them

The main challenge was that the available time was fairly limited and the client covers a broad range of assets and activities each requiring their assessment of the required resources under a wind-down.

APPROACH AND SOLUTION

Avantage Reply had to quickly organise sessions with all stakeholders to ensure it could obtain the required details on each activity to write a first version of the Wind-Down Plan. This version was then reviewed and refined during a series of secondary workshops and finally approved by the Board of Directors.

RESULTS AND BENEFITS

A detailed and extensive Wind-Down Plan was developed, following the FCA guidelines and industry best practices. The Plan was completed promptly and appropriately documented.