User experiences
One notable user was the US-based International Derivatives Clearing Group (IDCG), which was running a real- time risk management system from Razor. The solution was interfaced to an exchange and clearing platform from Nasdaq OMX.
IDCG evaluated a number of vendors, concentrating on those that were well-established in the banking risk management space. ‘If you look at a traditional futures house, its methodology of risk management differs dramatically from the risk models of a large bank that is trying to match risk across the multiple asset classes across the institution,’ explained Gerry Lawlor, chief technology officer at IDCG. ‘And traditionally, the exchange and clearing houses didn’t have to build high performance, complex risk management systems within their platforms. When I embarked on the technology due diligence in March 2008, it was very clear that no one had a high performance trading and clearing system in conjunction with a high performance risk system.’ And IDCG specifically required high performance OTC risk management software, as the group’s business is clearing OTC derivatives and multi- currency interest rate swaps. Developing the system from scratch in-house was not an
option, noted Lawlor. Even if the company was to take Nasdaq OMX’s offering for the futures market, it would have been too complex and time-consuming to adapt it for the OTC space. Razor, on the other hand, gave IDCG a much-needed ‘time- to-market flexibility, the right methodology and extreme high speed to keep up with the high velocity of trading’.
User list Razor
Example customers
ANZ (Australia) Australian Stock Exchange (ASX) (Australia) Calyon (US)
Canadian Derivatives Clearing Corporation (Canada) Commonwealth Bank of Australia (Australia) Federal Home Loan Bank of Pittsburgh (US) HSBC (UK)
International Derivatives Clearing Group (US) Kliring Penjaminan Efek Indonesia (Indonesia) LCH.Cearnet Man Group National Australia Bank (Australia) NetOTC (UK)
Royal Bank of Canada (Worldwide) Treasury Corporation of Victoria (Australia) Westpac (Australia)
150 Risk Management Systems & Suppliers Report |
www.ibsintelligence.com
Another interesting client was Royal Bank of Canada (RBC) which selected Razor in May 2007. The bank issued a tender in June 2006 to find a solution ‘for integrating market risk and credit risk on a single platform’, recalled Malcolm Warne who, at the time, was head of IT&e’s risk practice. The bank had been using two separate legacy systems for these operations. RBC went through a ‘fairly extensive evaluation process’
that resulted in a shortlist of three vendors. After a ‘small proof of concept’ for the three contestants, the bank asked IT&e for a ‘larger proof of concept’ (a five week exercise) and the contract was subsequently signed. There wasn’t a lot of customisation involved, said Warne. ‘Most of the work was onsite configuration.’ Razor was to be deployed at RBC’s headquarters first and then rolled out globally to the branches. The system is centralised and ‘all the numbers are calculated at the head office in Toronto’, gathering data from the Toronto, London, New York and other global divisions. The system was to be accessible to users in branches worldwide. In the fourth quarter of 2013, Razor Risk was selected
by NetOTC, a London-based multilateral netting and risk mitigation platform for managing non-standardised OTC derivative
transactions. TMX Technology Solutions was
selected to provide its enterprise risk management software, plus integration and consulting services. TMX Group could be in trouble with the Competition
Bureau of Canada, meanwhile, as trading start-up Aequitas has filed a complaint about alleged anti-competition practices. According to the complaint from a start-up, TMX Group is using its dominant market position to control the pricing of market data in Canadian capital markets.
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