turbocharge your valuation & risk technology

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Turbocharge Your Valuation & Risk Technology

November 28, 2017

11:00 am (ET) | 8:00 am (PT) | 4:00 pm (GMT) | 12:00 am (HKT)

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Institutional Investors Are Diversifying;

Asset Managers Are Adapting

Webinar

April 2017

Greenwich Associates

Presenter

4

Kevin McPartland, ModeratorManaging Director,

Market Structure and Technology Research


About Greenwich Associates


We provide unique market information, insights and advice to help

clients:

• Improve their business performance

• Drive product strategy & development

• Increase sales effectiveness

• Gain a significant competitive advantage

• Enhance operational performance

• Optimize development initiatives

• Transform their business to improve every aspect of customer experience

Firm Facts:• Founded in 1972

• Privately held

• Headquartered in Stamford, CT, with regional offices in

Pleasanton, CA, Toronto, London, Singapore, and Tokyo

Greenwich Associates is the leading provider of global market intelligence

and advisory services to the financial services industry

About Greenwich Associates

6

By the numbers:

260+ Sell-Side Clientsin the financial services industry

350 Employeesthroughout the United States,

Canada, Europe, Asia, and Japan

60,000 Annual Interviewswith buyers of financial services

150 Executive Interviewersgather data in 70 countries in 14

languages

310,000 Universe of Expertsunique buy-side contacts

Research Findings


Business is tough despite the rising market

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• The equity market is rising, but

that’s where the positive news

ends for institutional investors.

• Low rates, volume and

volatility are all a drag on the

market

• The reduced role of dealers as

market makers has hurt the

ability to execute on strategies

• Fee pressures are hitting asset

managers hard, particularly

those with active strategies

Credit

Crisis“Taper

Tantrum”


Investors are looking to tech partners for help

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• Utilizing third-party software on

the trading desk is encouraged,

and will only grow

• Fixed income markets are

behind, but are the biggest focus

today

• Data and analytics are often the

biggest differentiators

• Technology is only as good as

the integration, which is a top

buy side ask of tech providers


Integration is critical, and in demand

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Source: Greenwich Associates 2016 Trading Desk Optimization Research Study. Based on 144 respondents in 2015 and152 in 2016. *Speed of response, run-time/up-time. **Including derivatives.

5%

13%

16%

16%

16%

18%

26%

30%

33%

37%

39%

43%

51%

54%

Other

Access to algorithms

Predictive analytics

Control over order routing

Access to liquidity venues

Product scalability

Venue Analysis

Multi-asset-class trading**

Compliance functionality

Post-trade TCA

Pre-trade TCA

Reliability*

Customization

Ease of integration with other tools

What elements of your OMS are most in need of improvement?


Investors also look to the banks for help

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• The banks continue to act as

important counterparts for

institutional investors

• Traditional services still drive

counterparty selection, but

advice and tools related to

risk are increasingly important

• Bank provided data and

analytics are also on the rise,

but again integration with

third-party technology is key

Derivatives Service*, 41%

Lending Relationships,

36%

Debt Capital Market

Transactions, 13%

Advice on Strategic

Enterprise-Wide Risk

Management, 9%

M&A Advisory Services, 2%

*Day-to-day coverage, trading, research and back office.

**Margins, collateral, CSAs

Based on responses from 292 Global - Top Tier interest rate derivatives users in 2016 and 327 in 2015.

Source: 2016 Global Treasury Services Facility

Average Proportion of Derivatives Volume Allocated

to Dealer as a Result of:


Challenges RiskTech providers are overcoming

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• Financial services firms will pay up for customized/unique models and risk

management tools, however many risk models have become commoditized (i.e. VAR)

in the past decade.

• Cloud deployment has increased the profitability of the business, allowing users to

access the large amount of compute power needed to run complex risk models without

the capital expense of operating a data center.

• RiskTech providers need to manage there own risk: a small error in a model could

create huge losses for a customer. Furthermore, managing risks in the future can never

be a perfect science, with even informed assumptions sometimes proven wrong by

market activity.

• Quantitative models at the heart of these offerings are complex in their simplest form,

and creating something new and differentiating requires particularly deep knowledge of

and practical experience in the space. However, access to compute power via the

cloud has lower one major barrier to entry.

• The more third-party technology on the trading desk, the more integration between

platforms is critical and complex

Stamford | London | Singapore | Tokyo | Toronto | Pleasanton, CA

© 2017 Greenwich Associates, LLC. Javelin Strategy & Research is a division of Greenwich Associates. All rights reserved. No portion of these materials may be copied, reproduced, distributed or transmitted,

electronically or otherwise, to external parties or publicly without the permission of Greenwich Associates, LLC. Greenwich Associates®, Competitive Challenges®, Greenwich Quality Index®, Greenwich ACCESSTM,

Greenwich AIMTM, and Greenwich Reports® are registered marks of Greenwich Associates, LLC. Greenwich Associates may also have rights in certain other marks used in these materials.

13

Kevin McPartlandManaging DirectorGreenwich Associates

Direct: +1 203.625.4302Email: [email protected]

@kmcpartland

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James ChurchVP, Products and R&D

FINCAD

James Church joined FINCAD in 2011. He has over 15 years of experience in the software industry. Before joining FINCAD James was Vice President of OLAP Product Management at Business Objects, and prior to that was Director of OLAP Product Management at Crystal Decisions. He studied Computer Science at North Staffordshire University in the UK.

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Agenda

Introduction1

Technology Challenges2

Turbocharging Valuation and Risk Technology3

Conclusion4

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Agenda

Introduction1



Conclusion4

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Portfolio Management SystemsInvestment Drivers

Source: Aite - Portfolio Management Systems: The Next-Gen Tech Arms Race? November 2017

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Portfolio Management and RiskSystems landscape

Front Office

Middle Office

Back Office Operations, Accounts, Fund Admin. Management, Investor, Regulatory Reporting

Front Office Trading Engine - OMS, EMS, Broker Matching

Integratio

nM

arket Data, R

eference D

ata, Trade D

ata

Oth

er Systems

e.g. regulato

ry Rep

ortin

g, Investo

r Rep

ortin

g

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Front Office

Middle Office



Integratio

nM

arket Data, R

eference D

ata, Trade D

ata

Oth

er Systems

e.g. regulato

ry Rep

ortin

g, Investo

r Rep

ortin

g

Structured products

Portfolio Optimization

Backtesting

Margin & Collateral

Risk Reporting

Regulatory Reporting

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© 2017 - Proprietary and Confidential Information of FINCAD

a patchwork

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Front Office

Middle Office



Integratio

nM

arket Data, R

eference D

ata, Trade D

ata

Oth

er Systems

e.g. regulato

ry Rep

ortin

g, Investo

r Rep

ortin

g

Structured products

Portfolio Optimization

Backtesting

Margin & Collateral

Risk Reporting

Regulatory Reporting

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Manual Processes An Increasing Concern

Source: Confluence - Asset Management Trend Survey Report Q4 2017

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Agenda

Introduction1



Conclusion4

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Tina:CTO

Rachel:CRO

Ian:CIO

In-house System

Alan:Portfolio Mgr

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Ian:CIO

I have approval to look at launching new funds in Emerging Markets;

FX / Equity / Rate hybridNeed systems in place to support

this.

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Tina:CTO

I need to work with Alan on EM support. It is challenging for the developers to re-implement the

Excel prototypes we get.

We need to do a lot of research to support these new markets.

Alan:Portfolio Mgr

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I also need to work on backtesting the new investments strategy

I can use python, but I’m going to need to use my own

database for market data

Alan:Portfolio Mgr

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Hmm – some of the trades we’re looking into are quite

complex too.

I can’t see any way to deal with them other building some

Excel workbooks

Alan:Portfolio Mgr

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Tina:CTO

Rachel:CRO

Ian:CIO

≠ ≠

Alan:Portfolio Mgr

In-house System

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In the stone age

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key person risk

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unable to scale the business

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Agenda

Introduction1



Conclusion4

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beyond reach.

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Tina:CTO

Alan:Portfolio Mgr

Alan - it looks like getting you started on the new trading strategy is the

highest priority.

If I can use my python tools with our clean data

and flexible analytics, that would be awesome!

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Phase 1 – Integrated Platform and Python

Integrated Analytics Platform

We have chosen an integrated analytics platform and now we

can integrate it with the required data feeds.

Input Data• Portfolios• Reference data• Market data

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I can get started with my favorite python tools for

backtesting and other kinds of portfolio analysis

And setting up new markets is easy with the reference data and curves included in the

platform

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Phase 1 – Integrated Platform and Python



Analytics Data• Market models• Scenarios• Curves, Surfaces etc.

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Phase 2 – Pre-Trade Decision Support




Next we can get the standard trades set up in the vendor’s GUI, including risk reporting

Derived Data• MTM, Risk, Cash Flows, P&L• Time series

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Phase 2 – Pre-Trade Decision Support


I can use Excel to create tools for the more complex products we will be trading, all driven by the data and portfolios in the

common platform




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Phase 2 – Trading




I can see risk on demand for all the standard and structured trades, and without needing

spreadsheets!


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Future Phases

Tina:CTO

We can use the integrated analytics platform to

supply valuation and risk results to other front ends

We can bring the risk reporting for the other

teams into the same solution.

And integrate with our regulatory reporting

system, removing some more manual processes.

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An Integrated SolutionFor multi-asset portfolio and risk management





Python Portfolio and Risk Excel Other Systems

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An Integrated SolutionThat fits with existing technology ecosystem

Front Office

Middle Office



Integratio

nM

arket Data, R

eference D

ata, Trade D

ata

Oth

er Systems

e.g. regulato

ry Rep

ortin

g, Investo

r Rep

ortin

g

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“If a key software platform in your stack is not able to integrate with multiple external and internal systems, or if you don’t have a fairly open API set that permits integration and interconnectivity, then you’re setting yourself up for challenges”

Phil Dundas, Head of Information Technology, Americas at Schroders

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Collaboration

Data quality and integrity

Operational risk

Reconciliation issues

Manual processes

Business Efficiency

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Benefits

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Summary

• Many firms are struggling with a patchwork of portfolio management and risk systems

• The right technology is a key enabler for business success

• Reducing risk, and increasing efficiency

• Empowering you to grow your business

• Staged implementation builds success in manageable projects

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Kevin McPartlandManaging Director, Market Structure and Technology


Kevin McPartland has nearly 20 years of capital markets experience with deep expertise in market structure, regulation and technology impacting the fixed income, FX, and equity markets.

Prior to joining Greenwich Associates, Kevin was Director in the Electronic Trading and Market Structure group at BlackRock, and Principal at TABB Group. Kevin also spent time at JPMorgan, UBS and Deutsche Bank in varying capacities. He has a BS in Computer Science from Rensselaer Polytechnic Institute.

© FINCAD

FINCAD is the leading provider of integrated analytics for multi-asset portfolio and risk management. An industry standard since 1990, our advanced analytics, flexible architecture and patented technology enable global financial firms to improve returns, manage risk and comply with regulations. Clients include leading asset managers, hedge funds, insurance companies, pension funds, banks and auditors. For more information, visit www.fincad.com.

For more information:

North America 1 800 304 0702

[email protected]

Europe00.800.304.07020

Request a demo today.

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