TMX Group’s Razor Risk Technologies, the Australian enterprise risk provider acquired by TMX early last year, has teamed up with Numerix to strengthen its front-office capability and offer an integrated front-to-back risk solution. The Razor platform will call on Numerix’s pricing models for its credit risk, market risk and economic capital management solutions, supporting clients with complex derivatives and helping them meet the sophisticated risk requirements of regulations such as Basel III and Solvency II.
Razor Risk and Numerix had a working relationship that expired before the TMX takeover and are now working under a contractual arrangement that shares revenue when the companies work together with clients needing their joint functionality. Fundamental levels of integration between the Razor and Numerix solutions will be completed this year, with other aspects of integration being driven by unique customer requirements.
Razor is primarily expecting to win new customers as a result of the partnership, and also sees opportunities to be in the vendor selection process when existing Numerix customers re-architect risk systems. Working in its traditional back and middle-office market, Razor says the ability to leverage Numerix’s analytics and models should add customers and could help reduce project implementation times as pricing models do not need to be written from scratch.
Richard Simon, vice president of Razor Risk’s immediate parent, TMX Technology Solutions, explains: “Financial institutions are attempting to integrate their technology systems more tightly to help control costs, simplify operations and create a more comprehensive view across the organisation. They also want an integrated analysis of market, credit and liquidity risk within a single application. As Razor has traditionally been strong in the back and middle office, but less so in the front office, it made sense to partner a firm with strong front-office risk capabilities to present an integrated enterprise-wide risk solution to clients.”
Looking at the relationship in the other direction, he adds: “Existing investment in Numerix can be expanded by adding complimentary functionality from TMX Technology Solutions, such as risk model what-if simulations, attribution and contribution of risk factors analysis, and economic and regulatory capital solutions.”