Optimizing the front-to-back office equity derivatives processing of a European bank

A reputable European banking group is struggling to come up with a reliable front office tool to trade derivatives: legacy systems are not enough to deal with the ever-changing needs of demanding clients nor to rival aggressive competition from foreign banks trying to corner the market for exotic products.

Wanted: a back-up for existing tools

Risk managers are not satisfied with the quality of reporting provided by their trading colleagues. Needing an independent pricer to evaluate risk parameters in multiple diffusion models, they eventually also ask us to help them audit the whole process.

In the past, the bank relied on a patchwork of internally-developed tools: but precision shortcomings and length of data-processing made up for an overall poor performance: running simultaneously many simulations would result in hardware congestion and slow down critical middleware applications. Users also want a system that offers advanced analytic features, a wide choice of diffusion models and efficient calibration routines.

Finoptech-p1 exceeds expectations

Aiming at matching these requirements, Finoptech integrates Finoptech-p1 into the internal information system to provide a more suitable equity derivatives pricing solution. Thanks to our distributed computation framework, we propose a scalable computation resource adapted to the volume of products processed. The volume can increase in the future at low marginal cost. In addition to complex diffusion models, we also integrate dedicated ones used internally by the quants team. Building up on our own expertise, we help the Risk department to improve its Risk management procedures in such a way that the bank decides to build a wider trading system around Finoptech-p1.

To become traders' preferred tool for structuring complex products

Having implemented Finoptech-p1 traders improve their productivity for dealing exotic products by simplifying and speeding-up the management of their books without any investment in expensive information system.

This company now benefits from a significant competitive advantage for valuating and dealing structured products deriving from Finoptech-p1. It appears that Finoptech-p1 will greatly ease the day-to-day handling of derivatives-based assets. The traders are now able to focus on creativity to meet their clients' needs, all the more as Finoptech's integrated suite is designed to foster fine-tuning.