The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

Fortis Prime Fund Solutions Opts for SuperDerivatives’ Reval for Revaluations

Share article

Valuations solution vendor SuperDerivatives has bagged its second client of the year in the form of custodian and fund administrator Fortis Prime Fund Solutions, which has opted for the vendor’s revaluation service to source pricing for illiquid and complex derivatives. According to Amod Kumar, global head of strategy, business improvement and control at Fortis, the bank selected SuperDerivatives because of its ability to cope with illiquid and esoteric assets, an increasingly important corner of the market with regards to providing data transparency.

The bank is keen to demonstrate the independence of its pricing to the fund administration market and regulators, against a background of intense scrutiny from both corners. It selected SuperDerivatives’ solution because of its ability to price a range of complex assets. “The breadth and depth of the assets and structures it supports will ultimately benefit our hedge fund clients and their investors,” says Kumar. “In our testing of SD-Reval we were impressed with the consistency that it showed in its ability to price illiquid and esoteric assets.”

SuperDerivatives focuses on these hard to price assets and has managed to carve out a niche for itself in the space, although it is facing increasing competition from the larger providers out there, all of which are extending further into the area of complex asset class pricing.

The vendor signed a deal with Hungarian commercial bank OTP Bank in January, under which it will provide the bank with revaluations for its vanilla and complex FX and interest rates derivatives.

SuperDerivatives also released a report in January that indicates that it expects that the use of OTC derivatives will increase over the course of this year. The figures follow a report from the Bank for International Settlements (BIS) into usage of OTC derivatives trading figures, which revealed that the notional amount of OTC derivatives trades outstanding bounced back to reach US$605 trillion by the end of June. David Gershon, CEO of the vendor, explains: “I am convinced that the direction financial markets took in the 2000s, excluding credit derivatives, will in time return and derivatives will continue to evolve and volumes will soar as they offer a customisable and practical way to manage risk.”

Gershon indicates that this, in turn, will drive more demand for valuations services at the more complex end of the spectrum. “Used and valued effectively, these instruments remain useful insurance policies, which allow firms to manage the fundamental risk in currency and commodities fluctuations, interest rates moves, supporting trade, investment and economic output. There remains a key role for independent, effective pricing across the whole derivatives universe to set the benchmark price for valuations for derivatives,” he continues.

He reckons the introduction of more central counterparties (CCPs) in the OTC derivatives space will also drive volumes to increase, as the market becomes more confident in the stability of these instruments.

Related content

WEBINAR

Recorded Webinar: How to leverage the LIBOR transition to improve your data management game

The transition away from LIBOR (London Interbank Offered Rate) is well underway, but there remains considerable ambiguity around how the final stages will be executed – especially with regards to benchmark replacements in markets outside the UK. What are the options, where are the uncertainties and what stage have firms reached in their preparations? The...

BLOG

Debut Virtual Data Management Summit Highlights Industry Agility

In an extraordinary achievement that attracted over 1,000 delegates and well over 20,000 views, A-Team Group’s debut Virtual Data Management Summit went live last week to showcase the most cutting-edge content from an industry that has shown itself to be both resilient and responsive to the unique challenges presented by the ongoing coronavirus epidemic. Focusing...

EVENT

Data Management Summit USA Virtual

Data Management Summit USA Virtual will explore how sell side and buy side financial institutions are navigating the global crisis and adapting their data strategies to manage in today’s new normal environment.

GUIDE

Evaluated Pricing

Valuations and pricing teams are facing a much higher degree of scrutiny from both the regulatory community and the investor community in the glare of the post-crisis data transparency spotlight. Fair value price transparency requirements and the gradual move towards a more harmonised accounting standards environment is set within the context of the whole debate...