Innovative Derivatives Pricing and Risk Platform Supports Needs of Front Office Pre-Trade Analysis as well as Middle Office Risk
Numerix secures first-mover advantage with introduction of Numerix Oneview, a unified analytic application platform for enterprise level risk management and the optimization of capital, collateral and funding for maximizing profitability.
With the finalization of FRTB, the consolidation of XVA pricing adjustments into pre trade pricing and bilateral margin requirements becoming clearer, financial institutions are undergoing a transformative shift in risk technology infrastructure planning in order to meet implementation deadlines. However, legacy systems are siloed, often entrenched in duplicate processes and can be expensive to maintain in terms of human, compute and data costs.
“Built from the ground up, Numerix’s risk product stack has been designed to reflect the transformation of the front and middle office where we’ve carefully thought about risk silos, data processes and analytics in a holistic manner,” said Steven R. O’Hanlon, Chief Executive Officer & President of Numerix. “Given front office analytic requirements for transacting profitable trades and risk’s need to obtain ‘risk-informed’ pricing information across the portfolio, the change in market requirements has presented unique challenges for the CRO. These requirements are beyond just regulatory compliance, but drive towards the need for forecasting and decision making capabilities, as well as greater operational efficiency and cost savings.”
As a unified XVA pricing, counterparty credit risk management and market risk platform Numerix Oneview enables the rapid deployment of pricing and risk analytics including pre-trade decision support, XVA pricing adjustments, market risk analytics such as VaR/Expected Shortfall and scenario analysis, Stressed VaR and back allocated VaR, PnL attribution/explain report, real-time limits management as well as exposure measures for counterparty risk management. The Numerix Oneview dashboard allows managers to drill down/slice & dice huge multi-dimensional datasets to provide instant response times for complex risk and optimization calculations. Through the instant analysis, aggregation and visualization of large volumes of complex and dynamic data users can compare results over various time periods, make what-if inquires and achieve a timely, more accurate view of risk enterprise-wide.
“The siloed nature of business lines is a significant roadblock to innovation in capital markets. While these silos are conventionally difficult to aggregate, users of derivatives no longer have a choice as high costs and process inefficiencies are proving detrimental,” said Satyam Kancharla, Senior Vice President and Chief Strategy Officer. “Numerix Oneview provides aunified view of risk across an institution, breaking down silos between departments and desks to provide real-time market risk measures and counterparty exposures that firms can utilize to make informed risk, profitability, collateral and capital allocation decisions. With Oneview we will put critical decision variables at the fingertips of senior management where they can respond to market change and anticipate future risks that might impact profitability.”
Peyman Mestchian, Managing Partner at Chartis Research adds: “In a recent market study[1] Chartis forecasted the global risk IT expenditure in capital markets to be $23 billion in 2016. Our analysis suggests that the single biggest component of this expenditure relates to the cost of integration and unification of multiple analytical and data silos across the enterprise. The demand for unification is driven by various regulatory requirements as well as the desire to reduce cost and complexity. Silo-based risk management is no longer a sustainable strategy for any financial institution.”
Departing from the traditional approach to developing applications, the adoption of a unified consolidated philosophy enables Numerix core services and internal departments to be aligned with its single stack analytic platform. This enables Numerix analytics to be interoperable, flexible and transparent – and for Numerix as a business to be nimble in the marketplace where it’s pricing and risk applications can quickly adapt to meet customized business needs and requirements. As an extensible framework built on the same core analytics, pricing and risk applications can be built on the platform with complete model consistency.
