murex overall 1st sp technology rankings 2011

7/25/2019 Murex Overall 1st SP Technology Rankings 2011

1/5

Technology survey

1 REPRINTED FROM |STRUCTURED PRODUCTS | APRIL 2011

Technology triumphs

> In times of crisis, an investment in technology appears to be asafe bet. Odd as it may sound, if you are planning to be in

business as the cycle turns and you are faced with a slowing downof business then the smart money invests. And technology is the

easiest and most useful beneciary.Nice as that may sound, investment in technology by structured

products houses over the past two years has been a touch morecomplicated than this rationale. The reality for many producers ofnancial products is that they have been bombarded by regulationsand directives that all point to the introduction of not only greaterspeed but also improved transparency.

The need for transparency has also been driven by investors, whohave asked banks to develop products with less default risk and risktransfer. As well as wanting to know the name of the bank that hasissued the structured product they might buy, these investors wantto be sure that they are cleanly separated from risk that they do notthink should be theirs.

The nancial crisis has also required greater investment for moststructured products houses in the fund business. Previously happyto quickly ick out new products, these banks have had to come toterms with credit risk and the desperate desire that many investorshave had to avoid this at all costs. It is easy enough to say that youwill therefore expand your fund business, but it is harder to spendmoney on investing in what is a very expensive, commodity businessthat works on relatively low margins.

But the biggest investment in technology has been reserved forrisk management systems. With investors demonstrating variousdegrees of paranoia about the possibility that they could easily lose

all of their money, they need comforting. And in choppy nancialmarkets, if you are the one taking the risk of issuing and hedgingnew products, extra care is required. The only practical way toresolve all of these concerns is to step up the amount of time andmoney that you are willing to invest in risk management systems.

Richard Jory,Editor

Rank Vendor

1 Murex

2 Numerix3 SunGard4 Pricing Partners5= Algorithmics5= Sophis7 Misys8= Calypso8= Thomson Reuters10= Bloomberg

10= Modelity

Top 10 technology vendors


2/5

2STRUCTURED PRODUCTS | APRIL 2011

> Innovation is back in the structured products market andcomplexity never completely went away. So say the technology

vendors that serve the market and who must keep their software inline with the requirements of its participants. However, the innovationis happening in new areas in underlyings rather than payoutstructures, in those areas that were slower off the mark to create

structures such as forex and commodities, and in fund-basedproducts. And the complexity is in the portfolios of products createdbefore the nancial crisis and the ight to vanilla products portfolioswhich cannot just be wished away, but must be even more accuratelyvalued and carefully managed.

Meanwhile, regulators have been stepping up their demands,particularly in the area of capital to cover counterparty credit risk,resulting in the need to calculate credit value adjustments (CVAs) ontrades. This can be complex and computationally demanding,especially if performed pre-trade, and therefore requires sophisticatedanalytics and a high-performance processing environment.

It is in this environment, where software vendors have beenstepping forward with new technologies to help their clients meetthese challenges, that the 2011 Structured Products technology vendor

rankings have taken place. The results, which you can read on thefollowing pages, are our readers verdict on which technology vendorsbest helped market participants achieve their business goals.

This years winners are mostly familiar names, although there wassignicant movement in the individual placings, demonstrating thatthis is not a market where vendors can rest on their laurels.

Murex on topOverall winner was Paris-based front-to-back-offi ce system vendorMurex. The company dominated the trading system section andappeared in the top ve in half the pricing and analytics categories,as well as in the credit risk management, limits and collateralmanagement categories. Just pipped into second place was NewYork-based Numerix, which featured strongly in all the pricingand analytics categories and won both the market and credit riskcategories. Third was Pennsylvania-based SunGard, which was placedacross more categories than any other vendor, demonstrating thebreadth of its product suite, just beating off Paris-based PricingPartners, which won all but the equities category in the pricing andanalytics section.

Meanwhile, last years winner, London-based Misys, slumped fromrst to seventh place overall. However, this situation could well turnaround in the coming year following the rms recent acquisition ofSophis, the Paris-based front to back offi ce system vendor. Sophis

shared fth place overall with Toronto-based Algorithmics thehighest ranking of the dedicated risk management vendors.

For Murex, the past year has seen a continuation of trends that havebeen in place since the nancial crisis, says group chief executiveMaroun Edde. While there is an ongoing move towards less complexproducts, there is still a demand for new structures. But time to marketis critical. Developers need to be able to create new products quickly,

and with minimal programming. Here, Murex cl ients have benetedfrom the companys recently introduced scripting language thatenables them to create structures by describing the payout only, whilethe system automatically generates contract events, conrmations,settlements, and so on. In addition, Murexs technology enablesdevelopers to rapidly bring new structures into a productionenvironment that provides accurate and timely pricing, hedging, r iskmanagement, collateral management and back-offi ce processing something that is an absolute necessity in todays risk-focusedmarket, says Edde.

Another major trend is the need for a massive acceleration incalculations, says Edde. Clients want fast and accurate pricing andcalculation of risk sensitivities such as credit Value-at-Risk. In response,Murex has invested heavily in porting its pricing and risk code tohigh-performance computing environments, including graphicalprocessing units (GPUs) lightning-fast parallel-processingmicroprocessors originally designed for computer graphics, but wellsuited to nancial computation because many of the calculations, likegraphics, are also essentially parallel in nature. The use of GPUs has ledto calculation speed increases of between 60 and 300 times, makingit possible to manage [books of complex products] in quasi real time,instead of once or twice a day, and allowing enough Monte Carlosimulations [to take place] to get smooth gamma for better riskmanagement, says Edde.

The focus on risk, particularly the counterparty credit kind, along with

performance challenges and the need for transparency and continued innovationare all highlighted in the second annual Structured Products technology survey.Clive Davidson talks to technology providers about their solutions. Research wasprovided by Ana Mendes and Beatrice Leedell

GPUs make it possible to manage[books of complex products] inquasi real time instead of once ortwice a day, and allow enoughMonte Carlo simulations [to takeplace] to get smooth gamma forbetter risk managementMaroun Edde, Murex


3/5

Technology survey

3 REPRINTED FROM | STRUCTURED PRODUCTS | APRIL 2011

0 10 15 20 25%

Trading systems commodities

Murex 22.7%1

2

3

4=

4=

10.2%

7%

5.5%

5.5%

5.5%

Sophis

SunGard

Bloomberg

Calypso Technology

4= OpenLink

5

0 10 15 20 25%

Trading systems credit

Calypso Technology 19.3%1

2

3=

3=

4

17.9%

10.7%

10.7%

10%

Murex

Bloomberg

Misys

SunGard

5

0 10 15 20 25%

Trading systems cross-asset

Murex 19.3%1

2

3

4

5

13.1%

12.4%

9.7%

8.3%

SunGard

Misys

Calypso Technology

Thomson Reuters

5

0 10 15 20 25%

Trading systems FX

Murex 23.8%1

2

3

4

5

14.6%

9.9%

7.3%

6%

Thomson Reuters

SunGard

Misys

Calypso Technology

5

0 10 15 20 25%

Trading systems equities

Sophis 22.9%1

2

3

4

5

10.8%

8.3%

7.6%

5.7%

Murex

SunGard

Bloomberg

ORC Software

5

0 10 15 20 25%

Trading systems rates

Misys 18.8%1

2

3

4

5

12.7%

10.3%

9.7%

9.1%

Bloomberg

Murex

Thomson Reuters

SunGard

5


4/5

4STRUCTURED PRODUCTS | APRIL 2011

0 10 15 20%

Risk management credit

Numerix 15%1

2

3

4

5=

14.1%

9.4%

5.6%

5.1%

SunGard

Algorithmics

Murex

Fincad

5= 5.1%Sophis

5

0 10 15 20%

Limits

SunGard 15%1

2

3=

3=

5

14.2%

12.4%

12.4%

8%

Murex

Algorithmics

Thomson Reuters

Calypso Technology

5

0 10 15 20%

Collateral management

Algorithmics 15.7%1=

1=

3

4

5

15.7%

10.2%

8.3%

6.5%

SunGard

Misys

Murex

Calypso Technology

5

0 5 10 15 2 0 25 3 0 35 40%

Pricing and analytics FX

Pricing Partners 37.2%1

2

3

4

5

17.5%

6.3%

5.7%

5.4%

Numerix

Thomson Reuters

SunGard

Murex

0 10 15 20 25%

Pricing and analytics equities

Sophis 20.9%1

2

3

4=

4=

9.3%

8.2%

7.1%

7.1%

Murex

Numerix

Pricing Partners

SunGard

5

0 5 10 15 20 2 5 30 35 40%

Pricing and analytics Commodities

Pricing Partners 37.2%1

2

3

4

5

17.5%

6.3%

5.7%

5.4%

Numerix

SunGard

Murex

Bloomberg


5/5

Overall Number ONe

Murex provides a complete cross-asset and front-to-back offer for structured products combining of out-of-the boxcomplex payoffs & models together with structuring tools and model & products catalogue extensors.

For more information, please contact us at [email protected]

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FOr YOur cONTiNuOuS

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25 years of focus on building a capital marketsplatform, and on customer satisfaction.

murex overall 1st sp technology rankings 2011

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