Cardinal Analytics, a fintech start-up specialising in US corporate bond risk analytics, has selected the Datactics FlowDesigner data quality and matching platform to ensure the data fed into its credit risk model is accurate, complete and timely.
The Belfast based company decided to work with Datactics and sign a three-year licence for FlowDesigner after a project using Python to match data from three Mergent data feeds with different naming conventions failed to achieve a near perfect matching rate. It engaged with Datactics about a month ago and within three weeks a solution was developed that consistently matches 99.5% of the corporate bond data required to power its credit risk model.
The model is at the heart of Cardinal’s recently released Cardinal Analytics Risk Information service, which is based in the Amazon Web Services cloud and provides risk metrics for issues and issuers, and alerts traders to the risk of a bond going into default. The company has designed the service to provide more granular analysis than traditional probability models and supplies daily rank ordering of bonds, from highest to lowest risk. It also determines if an individual bond or industry sector carries a heightened risk compared to peers, an industry or the overall market.
Cardinal selected the Datactics FlowDesigner platform on the basis of its matching capability, fast implementation and transparent audit trail. It uses the platform as a pre-analytics layer to produce cleansed and matched data for its credit risk model.
Mark Fletcher, CEO at Cardinal, says: “The Datactics solution is an order of magnitude better than Python code. It is quick and effective in producing high quality data for the credit risk model, we can see the audit trail all the time, and we can generate high predictive accuracy scores. Every 1% improvement in predictive accuracy creates an additional $1 billion of bond defaults that we can predict.”
The company is currently trialling the Cardinal Analytics Risk Information service with potential users and expects clients to include tier one banks, asset managers, hedge funds and insurance firms. As well as being used by traders to analyse the relative risk of their portfolio holdings, generate trading ideas and monitor the market, the service can be used by risk managers to better determine credit risk.
For Datactics, the Cardinal contract marks the first time it has worked with Mergent data feeds and adds to its experience of instrument mapping and matching for clients using data from vendors such as Bloomberg and Thomson Reuters. It is also the first time it has developed a solution in a public cloud environment.
Stuart Harvey, CEO at Datactics, says: “Datactics is a good fit for Cardinal and other specialist analytics firms requiring a pre-analytics layer as we can swap out developer time and deliver fast and high volume data quality and matching using out-of-the-box logic and rules.”
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