Numerix is not a technology firm in the traditional platform processing sense. However, through its partnership with more than 30 technology firms, we feel that the analytics powerhouse has made a greater contribution to the European structured products market than any other technology firm in the space. Specifically, Structured Products has recognised Numerix for the work it has done in providing analytics software and technology solutions for retail and private banks all across Europe.
As well as analytics, Numerix excels with its multi-platform, cross-asset derivatives pricing and risk management software. And through partnerships with processing platforms - and its own analytics capabilities - virtually any structured product across all asset classes can be supported without modification or the need for software programmers. Using the same integrated platform, risk and portfolio managers can now mark-to-market their portfolios, measure the risk and stress test the portfolio.
In 2006, Numerix has tripled the number of partnerships it enjoys with other technology firms. This has enabled the Numerix analytics to be easily deployed into banks' systems 'off the shelf,' says Nick Haining, managing director, EMEA, at Numerix in London. The company's partners include many of the leading structured products platform processing providers such as Misys Summit (winner of this award last year), Calypso, Murex and Brilliance, Haining adds.
Wall Street Systems is another example of a partnering institution that uses Numerix for its European structured products clients. "We chose to use Numerix analytics because of the appropriate ease of integration, status as market standard for valuation and breadth of structured product pricing coverage," says Thomas Bergqvist, Wall Street's New York-based executive vice-president of product management treasury. "The partnership allowed Wall Street Systems to further access the retail, regional and savings bank market with an integrated treasury solution."
By linking its pricing software with the leading processing platforms in the market, Numerix has been able to penetrate the retail bank network throughout Europe. In all, Numerix now has more than 85 clients in Europe.
Its products are particularly popular with Austrian, Italian and German retail banks, Haining says. "There is a huge market for small and regional banks using our software in conjunction with our partner firms," he says. The smaller banks also effectively use Numerix analytics as their "own in-house quant teams", he adds. This is particularly useful in pricing structured products issued by investment banks. "By using our software small banks can test pricing and are better placed to compare products from different providers, improving the liquidity and efficiency of the retail market," he says.
One such client is Luxembourg-based bank BCEE. The bank structures its products in-house and also uses a few external investment banks to help manufacture its products. It distributes products to its own retail bank and private bank clientele as well as white-labelling products for other retail banks.
Reliability and flexibility
Numerix analytics are used on the trading desk with standalone Numerix software and are also integrated into the bank's infrastructure via Reuters Kondor. Pascal Berg, Luxembourg-based head of structured products at BCEE, says the bank uses the Numerix software for valuation of its structured products across most asset classes, and the Numerix software has capabilities to capture all its products. His sentiments are echoed by many clients contacted by Structured Products. "It is the most reliable, flexible, cost-efficient and easily the best software for structured products," Berg adds.
Other high-profile or tier one European bank clients include HSBC, West-LB, Societe Generale, Natexis Banque Populaire and Erste bank. For bigger clients, the Numerix system is often used alongside internal software solutions, Haining says.
WHY NUMERIX WON
Numerix has built strong partnerships with other technology firms to ensure its analytical software can be deployed in most banks' systems. Its software has improved the efficiency of the European structured products market by enabling retail banks to price and risk-profile their own products.
The week in Risk.net, May 19-25 2017Receive this by email