US Fintech Adds Structured Products to Asset Class Coverage
North America | Technology
By Lavanya Nair
Imagine Software enters structured products space following the expansion of its asset class capabilities.
Global cloud-based portfolio, risk and margin solutions provider Imagine Software has announced the expansion of its asset class offering to structured product issuers and traders.
The solution oversees the entire process in terms of trade lifecycles and process flow for structured products which includes P&L, cash management, value-at-risk, stress testing and operational reporting.
“We have built functionalities specifically for structured products”
Dr. Lance Smith
According to Imagine Software chief executive officer Lance Smith, the firm is offering a complete service because it not only provides a software that can handle the product, but also the data behind it all as well as the operational tools to support the lifecycle (posting of resets, coupons etc)
“Big banks can do this as well, but only for themselves while we can provide this service for everybody,” said Smith. “We have yield curves, volatility surfaces, correlations etc. that we maintain and then the whole world gets to use them. Or they can override as they wish.”
The fintech recently deployed an ‘enhanced local volatility Monte Carlo’ model, while the platform itself features a wide offering of structured products that include equity-linked notes (ELNs), reverse ELNs, autocallables, accumulators, decumulators, bull/bear notes, and fixed coupon periodic callable notes.
“We have built functionalities specifically for structured products though we cover a wide base of products across all asset classes including fixed income, commodities, equities, and currencies,” said Smith.
The firm has found a lot of interest for structured products, particularly in Southeast Asia.
“A number of securities firms and brokerages both in Hong Kong and Singapore (and other countries nearby) have been getting into the equity structured product business,” said Smith.
The new structured products capabilities add to the firm’s ‘institutional-grade functionality and cross-asset instrument support’. This underpins the entire front-to-back risk management operations for businesses, as well as its cloud-based portfolio and risk management system launched in 2000 which allows clients to customise and use the platform’s analytics and products.
Managing the risks inherent in their positions, including holding sufficient margin, is absolutely essential for prime brokers. The key question is whether or not they are measuring risks and managing margin effectively and proactively.
This summary is based on research conducted between February and March 2021 with 20 banks looking at current trends and priorities for Prime Brokers in the Margin, Collateral and Data areas.
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