01.09.2012

FX Risk Systems Evolve

01.09.2012
Terry Flanagan

Analytics providers expand coverage to asset class.

As demand continues to escalate for FX and FX derivatives, providers of analytics software are building out their product to service the asset class.

Quantifi, a provider of analytics, trading and risk management solutions to the global OTC markets, has expanded its platform to include FX coverage, as well as expanded coverage for interest rate products and support for regulatory initiatives.

Driven by client needs and transformations in the OTC markets, the latest version of Quantifi’s  pricing and analytics product, QX.1, enables users respond rapidly to opportunities and more effectively manage their risk.

“Quantifi has expanded its asset coverage with the addition of FX, in order to meet the challenges associated with increasing volumes of FX trades, market volatility, product complexity and ongoing regulatory change,” Rohan Douglas CEO of Quantifi, told Markets Media.

The FX coverage, as well as other QX.1 enhancements, are aimed at providing clients with a smooth transition for market changes including counterparty risk management, central clearing Basel lll, EMIR and Dodd-Frank, said Douglas.

“Quantifi has significantly improved and expanded trade and market data connectivity as well as increased performance and scalability to facilitate central clearing and adapt to the changing operational environment,” Douglas said.

A rapid increase in the use of FX options is being attributed to the heightened volatility in international currency markets, and the increasing need for corporations to review their hedging strategies in times of increasing uncertainty in the Eurozone.

Misys, a global application software and services company, said an analysis of client activity using Misys Confirmation Matching Service (CMS) in 2011 compared to 2010 shows a rapid increase in the use of FX options by its corporate and fund management clients.

Taken from the activity of 130 of its more than 1,000 global clients, including all of the top 10 foreign exchange banks, Misys analyzed the amount of options matched through its CMS solution and found that from September 2010 to September 2011 there had been an increase in matched trades of over 100%.

The rise in the volume of FX options is part of a broader trend of corporations updating their hedging strategies owing to the uncertainty in the Eurozone. FX options are now increasingly the strategy of choice as they provide much more flexibility and protection against the volatility.

Over the last year, MarkitSERV has been working with the industry to expand its service to support trade processing and clearing for FX.

TwoFour, a specialist provider of global real-time financial software solutions, has entered into a technology partnership with Logicscope, a provider of post-trade solutions that was acquired by MarkitSERV in September 2011.

Logicscope’s complementary technology and comprehensive product suite will enable MarkiSERV to offer the same standards of trade processing, connectivity and compliance to FX market participants that it currently offers for credit, rates and equity derivatives, MarkiSERV CEO Jeff Gooch said in September.

TwoFour and Logicscope have created an interface that delivers enhanced FX post-trade solutions to mutual clients.

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