Dion Global Solutions has partnered Numerix to move into OTC pricing, valuation and risk management with a hosted solution called dfferentia. The solution is the technology company’s first to be built from the ground up as a hosted solution and supports real-time pricing of foreign exchange and fixed income instruments with the promise of more to come.
Dfferentia is in beta test with four prospects in North America – one hedge fund, one bank and two small to medium-sized buy-side firms – and is due to be ready for client implementation towards the end of next month. Coverage of foreign exchange instruments will be available immediately, with fixed income to follow and then smaller OTC instrument groups such as commodities and swaps.
Ralph Horne, global CEO and managing director of Dion, explains: “Most OTC pricing products in the market were built eight to 12 years ago, so we decided to use new technologies, provide a fully hosted solution and steal a march on competitors.” Dion has spent two years building the pricing solution and with hosting sites in Europe and the US hopes to deliver speed, easy navigation and flexibility for users to structure their own OTC instruments.
On the company’s decision to partner Numerix and integrate Numerix CrossAsset analytics into dfferentia, Horne comments: “We could have built model libraries ourselves, but to get to market faster chose the partner route. We looked around the market for a partner and found that Numerix has good chemistry and is a leader in model libraries.”
Within dfferentia, Numerix acts as the engine for pricing calculations and risk analytics, with Dion adding workflow, an easy to use client interface, a range of reporting options and hosting. Dion has signed Tullett Prebon as its market data provider for OTC pricing, but the solution is data source independent allowing clients to use it with Tullett Prebon data or their own existing data sources.
Dion suggests dfferentia is superior to competitive black box solutions that use algorithms for trading and do not support users structuring instruments on the fly. Kershasp Carnac, head of financial analytics at Dion, says: “Dfferentia gives traders across an institution in multiple geographies a single cross-asset OTC derivatives collaborative hosted solution. It focuses on both sales and interbank traders and their need for flexibility and speed to price, structure, collaborate and analyse risk on demand. Dfferentia’s workflow and intuitive user interface allow faster distribution of vanilla, semi-exotic and structured products.”
With hosted OTC pricing and risk management ready to go, Dion is turning its attention to a product that will meet the requirements of the Foreign Account Tax Compliance Act and should be available in a couple of months. It is also building an integrated governance, risk and compliance (GRC) solution based on the aCCelerate GRC software it acquired with Chase Cooper and this expected to be market ready in about three months time. Scheduled for an October delivery is a settlement system that avoids the need for different vendor systems in different jurisdictions and can be implemented anywhere in the world by international banks with local market connectivity.