China Development Industrial Bank Outsources Trading Desk to Derivatives.com
Taipei-based China Development Industrial Bank (CDIB) has rolled out Imagine Software's Derivatives.com ASP-based solution to power the bank's new multi-strategy, global macro trading desk.
"The first and most immediate necessity for our new desk was an integrated multi-asset solution that could provide real-time front-office, middle-office, and risk management functions," stated Bertrand Hongre, head of macro trading at CDIB, one of Taiwan's largest and leading venture capital and investment banking institutions.
Among the factors that weighed on its vendor selection — including industry-leading functionality, fast deployment and implementation capabilities — were cost efficiencies and economies of scale.
"We think an ASP-based solution is infinitely preferable to a traditional software implementation. Not only is Imagine's Derivatives.com inherently easy to deploy, but because it's a completely outsourced solution, the bank avoids incurring the customary internal IT and data management support requirements," said Hongre.
CDIB plans to spin the desk off into a standalone fund in years to come, so a portable ASP-based solution outsourced from CDIB's internal infrastructure is suited for that purpose, added Hongre. In addition, Hongre said that Imagine could become a future alternative to CDIB's existing systems for fixed income, credit and commodities businesses, and it looks forward to expanding its usage of the real-time portfolio and risk management product.
Publish Date: September 02, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210300092
Wednesday, September 17, 2008
Tuesday, September 16, 2008
Omgeo Acquires Allustra and Launches Integrated Derivatives Product Line
Omgeo has acquired London-based collateral management technology provider Allustra. Allustra offers a suite of products that provide customers the ability to consolidate trade positions across asset classes, including OTC derivatives, and to manage the collateral process that mitigates the associated counterparty risk. Mark James, managing director of Allustra, joins Omgeo's executive committee as managing director.
In addition, Omgeo acquired a derivatives portfolio reconciliation platform designed by Global Electronic Market's (GEM), after piloting the technology with a brokers/dealer and a hedge fund. By joining GEM's derivatives reconciliation capabilities with Allustra's collateral management solution, Omgeo now offers a combined derivatives product line.
Publish Date: September 15, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210601553
Omgeo has acquired London-based collateral management technology provider Allustra. Allustra offers a suite of products that provide customers the ability to consolidate trade positions across asset classes, including OTC derivatives, and to manage the collateral process that mitigates the associated counterparty risk. Mark James, managing director of Allustra, joins Omgeo's executive committee as managing director.
In addition, Omgeo acquired a derivatives portfolio reconciliation platform designed by Global Electronic Market's (GEM), after piloting the technology with a brokers/dealer and a hedge fund. By joining GEM's derivatives reconciliation capabilities with Allustra's collateral management solution, Omgeo now offers a combined derivatives product line.
Publish Date: September 15, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210601553
Thursday, September 11, 2008
Markit Updates CDX Indices, Red Codes
Markit, the financial information services company that owns the Markit CDX indices and Markit RED, is making changes in response to the US government rescue of Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") under a conservatorship, which is classified as a bankruptcy credit event under the International Swaps and Derivatives Association (ISDA) credit derivative definitions.
New versions of all Markit CDX indices that will include either Fannie Mae or Freddie Mac as a constituent were published yesterday with both entities removed. New Markit RED codes were issued yesterday for the new versions of the Markit CDX indices, as well as for the Fannie Mae and Freddie Mac post-credit event entities, in order to reduce legal and operational risk in the credit derivative market. The Markit CDX indices are the most widely traded credit derivative indices in North America. Markit RED is the industry standard for reference entity and reference obligation identifiers used throughout the credit derivative market in trading, documentation and trade settlement.
Publish Date: September 10, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210600857
Markit, the financial information services company that owns the Markit CDX indices and Markit RED, is making changes in response to the US government rescue of Federal National Mortgage Association ("Fannie Mae") and Federal Home Loan Mortgage Corporation ("Freddie Mac") under a conservatorship, which is classified as a bankruptcy credit event under the International Swaps and Derivatives Association (ISDA) credit derivative definitions.
New versions of all Markit CDX indices that will include either Fannie Mae or Freddie Mac as a constituent were published yesterday with both entities removed. New Markit RED codes were issued yesterday for the new versions of the Markit CDX indices, as well as for the Fannie Mae and Freddie Mac post-credit event entities, in order to reduce legal and operational risk in the credit derivative market. The Markit CDX indices are the most widely traded credit derivative indices in North America. Markit RED is the industry standard for reference entity and reference obligation identifiers used throughout the credit derivative market in trading, documentation and trade settlement.
Publish Date: September 10, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210600857
Tuesday, September 09, 2008
Creditex and Markit Launch Portfolio Compression Platform
Markit and Creditex has successfully completed their portfolio compression platform for the credit derivative market including its first live runs for single name credit default swaps (CDS) in the North American and European markets.
The first North American live portfolio compression run, which took place on August 27 with the participation of 14 credit derivative dealers, was conducted for CDS contracts referencing several widely traded North American telecommunications companies. It achieved a 56% gross notional reduction of compressible contracts and a 49% gross notional reduction across all participating counterparties. The first European live portfolio compression run was held on September 4 with the participation of 15 credit derivative dealers. The service was run on CDS contracts referencing several widely traded European telecommunications companies, and achieved a 53% gross notional reduction of compressible contracts and a 46% gross notional reduction across all participating counterparties.
Markit and Creditex were selected by the International Swaps and Derivatives Association (ISDA) to provide infrastructure to support commitments made by major market participants to the Federal Reserve Bank of New York relating to improved operational efficiency and risk reduction.The new portfolio compression methodology designed by Markit and Creditex is unique in that it reduces operational risk while leaving market risk profiles unchanged. This is achieved by terminating existing trades and replacing them with a smaller number of new replacement trades that carry the same risk profile and cash flows as the initial portfolio but have less capital exposure.
The portfolio compression process will be run on a regular basis to compress the most actively traded single name CDS contracts systematically across all major sectors. This will reduce the total gross notional outstanding of CDS contracts in the $62 trillion market to a significantly smaller net amount.
Publish Date: Sep 08, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210600161
Markit and Creditex has successfully completed their portfolio compression platform for the credit derivative market including its first live runs for single name credit default swaps (CDS) in the North American and European markets.
The first North American live portfolio compression run, which took place on August 27 with the participation of 14 credit derivative dealers, was conducted for CDS contracts referencing several widely traded North American telecommunications companies. It achieved a 56% gross notional reduction of compressible contracts and a 49% gross notional reduction across all participating counterparties. The first European live portfolio compression run was held on September 4 with the participation of 15 credit derivative dealers. The service was run on CDS contracts referencing several widely traded European telecommunications companies, and achieved a 53% gross notional reduction of compressible contracts and a 46% gross notional reduction across all participating counterparties.
Markit and Creditex were selected by the International Swaps and Derivatives Association (ISDA) to provide infrastructure to support commitments made by major market participants to the Federal Reserve Bank of New York relating to improved operational efficiency and risk reduction.The new portfolio compression methodology designed by Markit and Creditex is unique in that it reduces operational risk while leaving market risk profiles unchanged. This is achieved by terminating existing trades and replacing them with a smaller number of new replacement trades that carry the same risk profile and cash flows as the initial portfolio but have less capital exposure.
The portfolio compression process will be run on a regular basis to compress the most actively traded single name CDS contracts systematically across all major sectors. This will reduce the total gross notional outstanding of CDS contracts in the $62 trillion market to a significantly smaller net amount.
Publish Date: Sep 08, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210600161
Misys Expands Asset Class Coverage, Improves Risk Management of Derivatives Trading Platform
Misys today is rolling out the latest version of its derivatives trading platform, Misys Summit FT Version 5.3. The new version has new and upgraded modules for equities trading, structured bonds and compliance monitoring.
The result, according to Misys, is deeper integration and improved visibility, including a new market risk limit monitoring dashboard with breach alerts.
Specific new offerings within Misys Summit FT V5.3 include:
A new end to end solution for cash & equity derivatives - Misys has created a new equities platform to provide extended coverage for trading and effectively managing equity cash and equity derivatives. Front to back coverage includes pre-deal checks, real-time positions, portfolio management, pricing, risk analysis, confirmation, settlements, corporate actions, valuation and accounting.
A new module for structured bonds " As many banks are issuing structured bonds to raise funding in a flooded market, there is a need to fully support structured bonds including structuring, issuing, investing, position-keeping, hedging, swapping, credit, and auditing. The new structured bonds module leverages Misys Summit MUST's technology and has been developed in cooperation with KfW, the German banking group, to enable the processing of structured bonds in the same manner as any standard bond. The new module provides enhanced position management, call processing, capital gains, yield calculations, accounting and theoretical valuation.
Market risk limits - To help with the volatility, high volumes and huge risks associated with today's financial markets, Version 5.3 includes a new market risk limits monitoring solution with limit breach notifications and dashboards covering P&L, portfolio or trade sensitivity to risk factors, trader daily volume and many more. Instant notifications through emails, SMS and desktop alerts get information to the right people at the right time, providing an environment of protection and regulatory compliance.
Publish Date:Sep 08, 2008
Friday, September 05, 2008
TABB Group Forecasts Monthly Novation of Credit Default Swap (CDS)
Eighteen years after the credit default swap (CDS) was created to help firms hedge against the risk of default of a given asset, TABB Group estimates that the average notional value at risk (the total value of a leveraged position's assets) of trades novated monthly will exceed $45.2 trillion by 2010, an 88% CAGR (compound average growth rate) from 2005.
Kevin McPartland, senior analyst and author of the new TABB Group research report "Credit Default Swaps: The Risk of Inefficient Markets," said in a press release that 90% of all CDS trades are confirmed electronically, but same-day matching of new trades and novations is rare and error rates are unacceptably high. "This is a lot of money to risk on a phone call," he added. TABB Group forecasts that nearly $170 million will be spent in 2010 by major sell-side broker-dealers to automate the affirmation process and mitigate the potential risk resulting from trade exceptions.
Despite current available technology, details of most CDS trades are still not affirmed between counterparties on trade date. The delay is not in legally confirming or settling trades, but simply in agreeing that each party recorded the same basic trade details such as the reference entity or notional amount. Where overnight batch jobs were once accepted solutions, with 2008 trading volumes and market volatility levels, explains McPartland in the release, "the risk created by not understanding your market and counterparty exposure until the next morning makes this standard practice rather unacceptable."
Publish Date: Sepember 04, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210300535
Eighteen years after the credit default swap (CDS) was created to help firms hedge against the risk of default of a given asset, TABB Group estimates that the average notional value at risk (the total value of a leveraged position's assets) of trades novated monthly will exceed $45.2 trillion by 2010, an 88% CAGR (compound average growth rate) from 2005.
Kevin McPartland, senior analyst and author of the new TABB Group research report "Credit Default Swaps: The Risk of Inefficient Markets," said in a press release that 90% of all CDS trades are confirmed electronically, but same-day matching of new trades and novations is rare and error rates are unacceptably high. "This is a lot of money to risk on a phone call," he added. TABB Group forecasts that nearly $170 million will be spent in 2010 by major sell-side broker-dealers to automate the affirmation process and mitigate the potential risk resulting from trade exceptions.
Despite current available technology, details of most CDS trades are still not affirmed between counterparties on trade date. The delay is not in legally confirming or settling trades, but simply in agreeing that each party recorded the same basic trade details such as the reference entity or notional amount. Where overnight batch jobs were once accepted solutions, with 2008 trading volumes and market volatility levels, explains McPartland in the release, "the risk created by not understanding your market and counterparty exposure until the next morning makes this standard practice rather unacceptable."
Publish Date: Sepember 04, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210300535
China Development Industrial Bank Outsources Trading Desk to Derivatives.com
Taipei-based China Development Industrial Bank (CDIB) has rolled out Imagine Software's Derivatives.com ASP-based solution to power the bank's new multi-strategy, global macro trading desk.
"The first and most immediate necessity for our new desk was an integrated multi-asset solution that could provide real-time front-office, middle-office, and risk management functions," stated Bertrand Hongre, head of macro trading at CDIB, one of Taiwan's largest and leading venture capital and investment banking institutions.
Among the factors that weighed on its vendor selection — including industry-leading functionality, fast deployment and implementation capabilities — were cost efficiencies and economies of scale. "We think an ASP-based solution is infinitely preferable to a traditional software implementation. Not only is Imagine's Derivatives.com inherently easy to deploy, but because it's a completely outsourced solution, the bank avoids incurring the customary internal IT and data management support requirements," said Hongre.
CDIB plans to spin the desk off into a standalone fund in years to come, so a portable ASP-based solution outsourced from CDIB's internal infrastructure is suited for that purpose, added Hongre. In addition, Hongre said that Imagine could become a future alternative to CDIB's existing systems for fixed income, credit and commodities businesses, and it looks forward to expanding its usage of the real-time portfolio and risk management product.
Publish Date: September 02, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210300092
Taipei-based China Development Industrial Bank (CDIB) has rolled out Imagine Software's Derivatives.com ASP-based solution to power the bank's new multi-strategy, global macro trading desk.
"The first and most immediate necessity for our new desk was an integrated multi-asset solution that could provide real-time front-office, middle-office, and risk management functions," stated Bertrand Hongre, head of macro trading at CDIB, one of Taiwan's largest and leading venture capital and investment banking institutions.
Among the factors that weighed on its vendor selection — including industry-leading functionality, fast deployment and implementation capabilities — were cost efficiencies and economies of scale. "We think an ASP-based solution is infinitely preferable to a traditional software implementation. Not only is Imagine's Derivatives.com inherently easy to deploy, but because it's a completely outsourced solution, the bank avoids incurring the customary internal IT and data management support requirements," said Hongre.
CDIB plans to spin the desk off into a standalone fund in years to come, so a portable ASP-based solution outsourced from CDIB's internal infrastructure is suited for that purpose, added Hongre. In addition, Hongre said that Imagine could become a future alternative to CDIB's existing systems for fixed income, credit and commodities businesses, and it looks forward to expanding its usage of the real-time portfolio and risk management product.
Publish Date: September 02, 2008
Source URL: http://www.wallstreetandtech.com/showArticle.jhtml?articleID=210300092
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