ATB Upgrades Risk Technology

Terry Flanagan

Alberta-based institution implements credit and market risk systems from SunGard.

ATB Financial is implementing market, credit and collateral management technology for risk measurement and for increased transparency across business silos.

Edmonton, Alberta-based ATB has tapped SunGard’s Adaptiv Riskbox and Collateral solutions.

“Adaptiv provides a platform for managing both market and credit risk,” Marcus Cree, vice president of risk solutions in SunGard’s capital markets business, told Markets Media. “ATB can use it to value and stress test its portfolio across both the credit and market space.”

ATB, which has been managing desk level risk of its derivatives book on the Adaptiv platform since 2006, will leverage the new Adaptiv products to manage counterparty credit exposure from both a collateral management and a simulation Potential Future Exposure (PFE) perspective, which helps the bank understand its potential exposure to its trading partners and proactively reduce its counterparty risk.

Because of the distribution capabilities, the outputs of those reports can be shared in a lightweight manner across ATB, helping to ensure that key stakeholders have up-to-date views of firm-wide risk and how they contribute to it, Cree said.

With assets of $26.5 billion, ATB is the largest Alberta-based financial institution. “We need the most robust infrastructure to support our management of counterparty credit exposure through collateral netting and PFE simulation,” said Peter Freilinger, treasurer at ATB.

As the industry becomes more sensitive to the possibility of counterparty defaults, firms are using netting and collateral to mitigate the effect of a default.

Adaptiv has been designed with “point” scalability in mind, said Cree.

“The central calculation engine is fully optimized and designed to run on grid software with extremely high efficiency rates,” he said. “Adaptiv’s component design means that the engine can be scaled up or down in isolation, so each customer can balance reporting speed, portfolio size and calculation complexity according the firm’s exact requirements, without disruption to the underlying risk production process.”

The same is true for risk distribution; the firm can give new stakeholders access to customized risk dashboards without any impact on the underlying system.

“In practice, this means that risk production, including intraday trade corrections, is controlled by risk analysts to help ensure that the correct risk numbers are being published,” Cree said.

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