Pricing and risk analytics solution vendor Quantifi is bargaining on a “regulatory tsunami” this year to spur on spending in the OTC derivatives valuations data and risk management sector, according to CEO Rohan Douglas. In order to keep pace with the changes, the vendor has upgraded its flagship pricing, hedging and risk analysis solution by adding in new functionality to support risk reporting, streamline operations, expand product support and improve performance and scalability, elaborates Douglas.
“Regulatory change has already had a profound impact on the OTC markets and we believe this impact is only just beginning. We expect 2010 will see significant changes to market structure, the introduction of additional standardised products, and an increased demand for efficient and automated OTC processing and more detailed and timely risk management,” he explains.
The upgrade to version 9.3 of the vendor’s solution takes into account the changes that have been effected thus far within the global credit markets. It therefore aims to improve firms’ risk analysis while increasing performance and improving operations. To this end, the new release enables clients to perform faster pricing and risk analysis within a more scalable infrastructure, claims the vendor’s chief technology officer Mark Traudt.
The “tremendous changes” that Douglas reckons have occurred in the OTC markets have been driven primarily by two factors: market turmoil from the credit crisis and the overhaul of regulation of the OTC markets. “These changes have driven client demand for more detailed real-time risk analysis, simplified operations in a distressed credit environment, and updated product support for standardised OTC contracts,” he elaborates.
“We have a longstanding commitment and track record of rapidly responding to client demand and market changes which has driven this product upgrade,” he claims. “We believe this upgrade reaffirms our lead in innovative solutions with a new generation of risk reporting that is more flexible, faster, easier to use and more automated. We also believe this upgrade positions our clients well for the changes to the OTC markets that are anticipated for 2010.”
Quantifi generally completes around three or four major releases each year as part of its commitment to match evolving market and client demands, according to Douglas. This new release in particular was done over a four month release cycle. “One of the things we aim for as part of the release cycle is to constantly engage clients and make sure we are focused on their needs,” he adds. This engagement includes involving them in the prioritisation, specification and review processes of the solution.
The resulting upgrade includes a number of new applications such as a new aggregation and reporting application dubbed Risk Navigator. The application allows users to build interactive composite reports with tables and graphs of current and historical data and results, says Douglas. It also includes the Credit Event Manager application that automates and simplifies workflow processing of corporate events using automated credit event feeds.
The vendor has also expanded its product support and now features Quantifi Risk support for synthetic collateralised loan obligations (CLOs) and credit default swap (CDS) options, and Quantifi XL support for convertible bonds, constant maturity swaps (CMSs) and constant maturity treasury (CMT) swaps. Douglas explains that the underlying software has been improved in terms of performance and scalability with out of the box support for symphony grid, semi-analytic sensitivities and optimised results caching.
“Version 9.3 also includes many more incremental enhancements based on client and market demand, all designed to make the Quantifi suite of products as effective and simple to use as possible,” he adds.
Despite the increase in competition in the risk solution vendor space over the last year or so, Douglas is convinced that Quantifi is sufficiently differentiated from its closest competitors to be able to last the distance. “We are told by our clients that our solutions are in many ways unique in the vendor space in terms of functionality and ease of use,” he explains.
“In most cases our software is replacing manual or internally built solutions, and often our software complements rather than competes with other risk management vendor products,” he continues. “This I think is reflected by our very high referral rates for sales (more than 75% in 2009), clients lost to other vendors (0% in 2009), and our very low loss rate to other vendors in sales (less than 1% in 2009).”
It will be interesting to see whether those numbers remain the same for 2010.