Numerix : The Leader in Derivatives Pricing, Valuation and Risk Management

Blurb: To be successful it’s imperative to have a clear understanding of the markets you’re in, the individuals you’re trying to motivate and the business objections of the organization.

Since the company’s inception in 1996, we have been proven a pioneer of derivatives pricing and risk analytics for the financial services market. We have proven that, in addition to being a leader in pricing, valuation and risk management, we are also a solution-selling company focused on solving complex challenges with business-specific solutions.

In our business, a range of common challenges face Microsoft customers, especially in terms of sector-wide adoption of cloud technology for risk analytics and big data management. Stricter regulatory requirements demand that financial institutions have an adequate means of measuring risk, for which increased transparency and big data management is essential.

Many and varied asset classes each produce a comprehensive set of data, the likes of which are stored independently and remain a challenge to assess and aggregate when lacking a consistent analytics solution. The lack of consistency, not only across independent silos of data, but also across models and measures, has severely hampered the industry’s ability to assess risk. Driven by regulatory changes, this has impacted both the front and middle office.

When we think big data,we must also think big compute. Trading operations combined with simulation technology for future exposure produces millions of outputs, and in order to have a business impact, those must be calculated in real-time. When we talk Software-as-a-Service (SaaS),we inevitably think of data storage, but we must also consider the availability of all these cores for compute purposes. This can present a significant challenge.

In terms of our expertise and experience, Numerix’s major strengths lie in itshuman capital, intellectual property, economic model, and an efficient distribution scheme. The company’s 200 employees – two thirds of which possess a PHD or Masters degree in either applied mathematics or financial engineering – are highly adept at addressing the various and exacting demands of the complex risk and pricing challenges facing today’s global financial marketplace. We have attained a client base of over 700 clients and 90 partners across more than 26 countries.

At the onset of the global financial crisis, individuals were left deciphering spreadsheets trying to calculate risk exposure as most were without a better means of assessing data holistically. Solutions to help manage this big data and consistency challenge have since proven to be incredibly valuable resource in risk management, wherein stringent regulations have come to demand the utmost standards of proficiency and transparency. In fact, the greatest challenge facing financial institutions is to measure riskin real-time, holistically across all asset classes. Without a holistic approach, the CIO, CRO and CFO are racing through a speed-trap without the benefit of a speedometer in their car.

At Numerix, through the real-time analysis of large volumes of complex and dynamic data, financial and insurance institutions can achieve a timely, more accurate view of risk enterprise-wide, and make informed business decisions with confidence. With cloud enabled solutions, customers can utilize cores in the most meaningful way possible, while successfully achieving performance benchmarks. And when assessed from an enterprise-wide perspective, utilizing the big data and big analytics solutions tools for risk management can help protect against severe financial downturns.

We drive demand for enterprise deployments of Azure and SQL Server that addresstoday’s more complex risk analytics initiatives.

Numerix Cross Asset Analytics Platform

The Numerix CrossAsset analytics platform provides a flexible and transparent framework to support real-time risk for the front office and risk department, derivatives valuation, collateral optimization, dynamic hedge analysis, scenario analysis and aggregate risk measures.

The Numerix CrossAsset Server is a scalable, high performance computing environment capable of producing trillions of pricing and risk calculations and terabytes of data. The Server is based upon our Integration Layer which enables integration into 3rd party models, pre-defined templates of validated financial instrument definitions, models and curves. The Server is designed to easily integrate into any existing architecture, serving as a ‘single source’ analytics system from a single desk to enterprise-wide deployments.

Accessible through Excel add-ins, C++, C# or Java, Numerix can be deployed on a single desktop, across different trading desks, or enterprise-wide.

The Numerix CrossAsset Analytics platform is fully Azure enabled. Sell-side, buy-side and insurance firmsmake use of our technology to manage their portfolios and assess risk intra-day, and enterprise-wide by bursting pricing and risk calculations to the cloud.

Calculating complex risk measures on derivatives portfolios faster, more granularly and more frequently results in more timely and accurate information for daily risk management and real-time decision making – at a fraction of the cost and deployment time.

Within the financial services arena, we have set an undoubted standard in pricing and risk analytics.

In 2012, we were named Microsoft’s ISV Partner of the Year. Winners were chosen from a set of nearly 3,000 entrants worldwide. Numerix CrossAsset Solutions are ranked #1 in Market and Credit Risk Management, Pricing & Risk Analytics and Credit Value Adjustment (CVA) calculation.

With our Azure-enabled Numerix CrossAsset solutions, customers can get the right answer faster by bursting calculations to public, private or hybrid cloud environments. As a result, our customers save time, money and are empowered to make better trading and risk management decisions. Our ongoing relationship with Microsoft underscores our strategic commitment to continue aligning our efforts in the best interest of our mutual customers.

Our global risk mandate going forward is clear – continue as the leading independent provider of award winning CrossAsset analytics for the structuring, valuation and risk analysis of derivatives and structured products, while at the same time overseeing the further rapid global expansion of Numerix risk management products/services into business segments such as Banking, Insurance and hedge fund administration.

Over the next several years, we will also continue to position the Numerix CrossAsset analytics platform and Server. We provide a pricing and risk calculation enginecallable by many concurrent clients capable of handling large volumes of vanilla, semi-exotic and exotic derivatives. The server can handle the processing of many independent calculation requests submitted by clients using a number of different client-server interface technologies. It supports all asset classes, models and deal types that can be handled by the underlying CrossAsset library.

We have challenged ourselves since 2004 and we’re constantly pushing into new marketplaces – this has been the key to our growth and continued success. As such, we are constantly trying to build new technology that addresses the financial regulations fostering the change throughout our industry.We see ourselves as a company that has not only pivoted to risk but pivoted from a tools-based selling company to a solution-selling company.

This takes a completely different skill set and a completely different focus because we built the CrossAsset Server technology which sits atop our cross-asset analytic platform. This enables us to evolve inside a public cloud, like Microsoft Azure, or in a private cloud, which is a home-grown system where there’s a messaging bus.

Our pricing analytics and risk measures are now third generation technology for Numerix. In fact, we successfully built from the ground up a new and innovative approach to solving the ever growing, and constantly changing regulatory requirements for enterprise risk.

Financial institutions can now:

  • Solve the individual silo risk issue
  • Measure risk at the front office
  • Leverage XVA measures within the front office market risk offering
  • Take advantage of a next generation middle office market risk offering born out of regulatory changes
  • Have consistency of models without having to create new models by leveraging defacto standard models as part of a combined pricing and risk single stack platform
  • Produce Real-time and batch calculations

To be successful it’s imperative to have a clear understanding of the markets you’re in, the individuals you’re trying to motivate and the business objections of the organization. There’s a finite amount of time, and there’s infinite ways we can use that time, but by having clarity on what we’re doing and why we’re doing it, as well as the desired impact of that action, we are able to choose the best course of action, spend time wisely and move faster.

At Numerix, we believe the best trading decisions require the best analytics. Through cloud enablement, users can scale calculations instantly gaining access to faster processors and more memory without the cost; better aligning pricing and risk across the company. From an enterprise risk management and analytics standpoint, we’re most excited about continuing to encourage and precipitate the adoption of cloud technology for financial institutions who demand greater real-time insight across the enterprise, to mitigate risk, improve profitability and comply with regulatory requirements.

In fact, hedge funds and asset managers with less than $2 billion under management are seeking new and cost effective ways to price, value deals and risk manage their portfolios, but need a SaaS or Managed Service. Through our constant innovation, and with the introduction of CrossAsset Server, we will be providing a variety of applications that are SaaS enabled for this specific market and we intend to further our Microsoft partnership to enable such a solution. Additionally, since we are agnostic to deployment schemes we can adapt to any kind of cloud enablement offering that any client might require.