Inside IT

PROFILES: SuperDerivatives: a client favourite

“It’s a very beautiful thing.” David Gershon is talking about theoretical physics, in which he has a PhD, but he could easily be talking about the universal success SuperDerivatives achieved in this year’s survey. Gershon, who has a trading as well as a physics background, founded the company early in 2000. Before SuperDerivatives, options pricing was highly complex and Gershon soon realized that if someone could come up with an easy-to-use solution, many people in the financial industry would benefit immensely. Thus, SuperDerivatives was born. SuperDerivatives’ benchmark product, SD-FX, was the first currency options pricing system. SD-FX generates accurate market prices for all types of FX and exotic options and provides transparency for pricing currency options. Traders can now determine the fair market price for options in advance of the actual trade.

Rino Giambertone, an FX market trader at Italy’s Abaxbank, was drawn to the convenience of SuperDerivatives. “Because the system is online, you can use it in any position: at the office or at home.”

As the market enlarges to include more tradable options, SD-FX has incorporated them. More and more, banks are turning to SuperDerivatives for pricing software rather than using in-house offerings. Gershon reasons this is because “we can deliver new classes of options faster, even faster than internal programmers”.

SuperDerivatives’ ability to stay on top of the game is exemplified in its new product line. Three new products will launch in late summer: pricing systems for equities, interest rates and commodities. The company has also recently announced the launch of SD-MM Reval, which will help derivatives traders comply with new accounting standards, and which aims to make the revaluation process for exotic option portfolios simpler and more reliable.

Beyond product innovation, Gershon attributes SuperDerivatives’ success to the company philosophy: it’s all about the clients. “We take all requests from clients, no request is too silly. From the colour of the screen to the size of the font, we will cater to every client need.” SuperDerivatives’ ability to both listen and respond to its clients is what it believes sets it apart from some of the larger technology vendors. “The big companies can sometimes be very bureaucratic and slow, which hampers their ability to respond to market changes and to client needs,” says Gershon. By contrast, he asserts that SuperDerivatives is “fast and dynamic”.

With SD-FX consistently performing well in our survey, it’s easy for banks to agree with Gershon: it really is a beautiful thing.

-Katrina Haagensen

EquiLend: simplicity in securities lending

“The theory of putting EquiLend together,” explains Dirk Pruis, president and CEO, “was to take this spider’s web of files moving around and create a hub-and-spoke model that would allow firms to conduct business more efficiently as everyone would be accessing the same system.” Securities lending was once a long process of telephone dealing and manually entered file transfers, with lender-dependent formats. EquiLend was founded and is backed by 10 financial powerhouses, including Morgan Stanley and Goldman Sachs. The message-based electronic securities trading platform owes its success to standardization and simplification; such that transactions take minutes to complete instead of much of the day. This is especially important for those doing high-volume trades daily.

“Rather than having multiple file formats, lenders and borrowers have one standard that has been developed by EquiLend; so both sides of the transaction are talking the same language,” explains Carrie Schwartz, EquiLend’s director of marketing and communications.

The benefit for EquiLend clients is simple: volume. Pruis says that AutoBorrow, a popular product targeting straightforward transactions, “allows people to scale their business virtually infinitely. Volumes could be three to four times what they were before we started, with the same or even fewer people.”

In-house software can be adapted to plug in to EquiLend; some off-the-shelf applications are available fully equipped with links to the platform or clients can simply lease a direct line and connect that way. Clients can also pick and choose from about a dozen products within the suite to meet their needs.

EquiLend does not constantly release upgrades; instead it evolves in line with lenders’ suggestions. “EquiLend was an industry initiative, and 80% of the industry’s needs are similar, so they upgrade only when essential,” says a Merrill Lynch banker. This year, the company added AuctionPort, a feature that enables lenders to auction portfolios.

There are more pragmatic reasons not to keep changing, as Pruis explains: “Most of our clients have done a full integration that is heavily embedded into their proprietary system, so we try not to change our underlying messaging protocol.”

Da Ly Nguyen

Wilshire Associates: staying at the forefront

Wilshire Associates has always strived to be on top of its industry. Even in the early 1970s, when the company was founded by Dennis Tito, it created the first asset/liability model for pension funds. According to senior managing director Robert J Raab: “Wilshire Associates was the first firm to offer the investment community innovations using very quantitative tools.” Wilshire’s ability to stay abreast of market trends continues with the launch of iQuantum. This builds on the success of the Wilshire Quantum suite, which is a set of distinct products such as Abacus, Axiom, and Atlas, and provides them all in one package. So, rather than having to buy equity analytics through Atlas, fixed-income analytics through Axiom, and performance measurement through Abacus, investment managers can pick up all three through iQuantum – an integrated performance measurement, performance attribution and risk management solution for multi-currency, multi-class portfolios.

“What it really comes down to,” says Gareth Allison, vice-president of the London office, “is that our clients just want to do their jobs. They don’t want to check data, they don’t want to reconcile their performance numbers with their attribution numbers, and they don’t want to be chasing benchmark providers because the returns are different. By having iQuantum, they can get back to their jobs knowing that they’ve got a full support network behind them.”

Raab credits the company’s success to something very simple. “We listen to our customers. We are always probing and looking to what our customers’ next step is going to be in implementing technology to help them solve problems.”

Not only does Wilshire listen to its clients, it is known for the support it provides them. Matt Knowles, who works for the qualitative solutions team at RBS Financial Markets in London, states that Wilshire’s customer service is excellent. “Wilshire is different because you don’t get a helpline, instead, you get a direct contact. That allows you to develop and build a relationship with them.”

First place in the portfolio management customer communication ranking clearly shows that. KH

CashTech Solutions: leaner and meaner

Before 1994, the cash management system in India lagged behind its western counterparts. Indian banks used proprietary systems for collections and disbursements, and foreign software could not meet the demands of a high volume, decentralized banking system. Three classmates from the Indian Institute of Management and a fourth friend saw a need for efficient cash management, and founded CashTech Solutions. As India embraces technology and the market for reliable and efficient software increases, Ramaswamy Iyer, founder and director of CashTech Solutions, comments that the company “has to be smaller, leaner and meaner” if it is to cope with the pace of change necessary to compete worldwide. CashTech has certainly managed to appeal to large non-Indian banks, with ABN Amro and Deutsche Bank among its 25 clients. “By establishing and operating the company in India we were well prepared to address the challenges of expanding our horizons farther into Asia and the rest of the world,” says Iyer.

In order to stay ahead of its competition, CashTech – now a subsidiary of US company Fundtech – focuses on technology, keeps abreast of the ever-changing regulatory system and understands the evolving needs of banks and their clients. It offers upgrades twice a year; the newest version will be released in the third quarter this year.

The software, which is fully customizable, takes between three and nine months to implement, although the firm has managed to do this in just 45 days for Global Trust Bank – now merged into Oriental Bank of Commerce – which allows banks to avoid becoming overly distracted by IT concerns. India’s HDFC Bank installed the centralized CashIn version of CashTech’s product in approximately 200 locations in 1997. Surya Prasad, vice-president of wholesale banking, says: “We are a large bank in terms of volume and profitability, and CashTech has a full range of products that best suit us.”

Another Indian bank, Syndicate Bank, had an internal cash management system until only four years ago. R Alagiri Samy, senior manager of operations, explains the need for change. “The previous software catered mainly to local collection; and we were not able to network the front ends, whereas CashIn supports all these features; collection and network between branches,” he says.

Recent developments at CashTech mean that clients can now track payment histories worldwide and generate capital by using features such as clearing services, which allow them to act as outsource partners for their corporate customers as well as offering fee-based services such as recurring transactions and cash forecasting. DN

Misys: giving reach to niches

A plethora of niche companies has moved into the industry but Ivan Martin, CEO of Misys’s banking and securities division, is not worried. For Martin, Misys has the speed, creativity, and flexibility of an entrepreneurial company while retaining financial strength and stability. Over the past 10 years, Misys has been highly acquisitive and has swallowed up several small, specialist, financial technology companies, kept much of what made them successful to start with, and added the Misys know-how and distribution power. “Misys has taken good products and made them into great products,” says Martin. Misys, with clients in more than 130 countries, is one of the world’s leading providers of financial technology services. According to Martin, 90% of the world’s top 50 banks use its technology and software. However, he is quick to add that Misys also services banks throughout the world, in regions such as Bangladesh, the Middle East and the Philippines. “Because we’re a global supplier and one of the biggest in the marketplace, we have products that can satisfy a smaller banking operation as well as the biggest tier-1 bank,” he explains.

Misys’ products are multi-functional and cover a wide range of asset classes. Three products, Summit, Opics, and Treasury, were consistently nominated in our survey. Opics is a leading treasury derivatives capital market solution, Treasury provides FX confirmation and matching services, and Summit is a trading and risk management package.

Although many banks are turning to in-house software, Martin is optimistic about Misys’s position. He believes that with increased competition and the new compliance requirements, more banks will turn toward third-party vendors. “In-house development fails to take into account full product life-cycle management, focusing primarily on software development rather than maintaining legacy software, which is traditionally a much greater cost.” Martin offers a startling statistic from one IT consultancy: 90.5% of banks’ IT expenditure is allocated to maintaining old systems rather than developing new ones. Martin believes that banks will soon break out of this cycle by taking third-party software applications. And when they do, Misys will be well placed to deliver. KH 

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