Numerix: Real-Time Intelligence for Capital Markets

Steve O’Hanlon, CEO Capital markets have always been accustomed to ups and downs concerning pricing fluctuations and regulatory pressures. However, the fall of 2008 witnessed one of the most horrific events in the history of U.S. financial market with major markets losing more than 30 percent of their value. Digging deeper, market analysts believe that credit derivatives largely contributed to the market collapse. The credit derivatives were designed to be a method of hedging against a company’s creditworthiness, similar to insurance. But unlike the insurance market, the derivates market was unregulated—there was no requirement that the issuers of derivatives contracts maintain a certain amount of money in reserve to pay out under a worst-case scenario. In such a tumultuous situation where most companies involved in the capital markets succumbed to unprecedented financial disruption, Numerix—a provider of inventive risk analytics technology for the financial services industry—stood abreast with a different view of the complete scenario. Having served the market since 1996, the company has been a seasoned wizard to turn the market challenges to their advantage. “We seized the opportunity by realizing that the new form of structured products market would be the risk measures,” says Steve O’Hanlon, CEO of Numerix. As the market changed with new regulations, the company started focusing on creating risk functions to work with their established pricing capabilities. “This is where Numerix has been at its best, because we looked at all the changes that needed to be made, leveraging our analytic pricing and risk measures to go after regulatory change.”

Numerix has been shaping the capital markets industry in the area of risks by combining pricing with models that are the de facto standard in the industry. Creating the underlying prices that are critical to a risk system and then having the risk measures built from the ground up to serve today’s needs. “Numerix is taking a ground-breaking approach with the introduction of Oneview—a unified analytics application platform for enterprise-level risk management,” says O’Hanlon. As the cutting edge pricing, risk, analysis, and trade management platform, Numerix Oneview Enterprise Platform is designed for the next evolution of the capital markets. Numerix Oneview is an innovative derivatives pricing and risk platform that supports the needs of front office pre-trade analysis as well as the middle office. The Oneview platform is particularly targeted at firms that require a highly-scalable, interoperable, flexible, and transparent analytics solution. “With Oneview we have put critical decision variables at the fingertips of senior management where they can respond to market changes and anticipate future risks that might impact profitability.”

As a unified X-Value Adjustment (XVA) pricing, counterparty credit risk management and market risk platform, Numerix Oneview enables the rapid deployment of pricing and risk analytics.


Numerix is taking a ground-breaking approach with the introduction of Oneview—a unified analytics application platform for enterprise-level risk management


This includes pre-trade decision support, XVA pricing adjustments, market risk analytics such as VaR/Expected Shortfall and scenario analysis, real-time limits management as well as exposure measures for counterparty risk management. With such capabilities, the OneView product has made a significant mark in the risk management market and has been awarded for pricing and valuation, XVA and strategy by RiskTech100 2018, a comprehensive study of the world’s most significant risk technology companies. “The core of Numerix Oneview is rooted in powerful analytics within a real-time analytic platform for pricing, risk analysis, and trade management. It’s this platform that underpins our intelligent front-to-risk vision,” says O’Hanlon.

The OneView Architecture

Driven by innovations in dependency graph technologies, OneView is the only real-time cross-asset platform putting the front office first, while driving analytic consistency across all business lines. Its underlying technology, the Oneview Graph enables true real-time, event-driven performance of the Oneview Enterprise platform. As a development platform based on a directed acyclic graph technology for constructing distributed component-based systems, the graph allows business components to discover and “talk to each other.” The streaming graph framework activates modules if the data they depend on changes, resulting in real-time updates to positions and other risk metrics.

Oneview’s open architecture is built from the ground up to provide a consistent and powerful foundation to create a unique solution. It allows clients to choose from a selection of Numerix Business Services applications or develop and connect bespoke capabilities, data sources, and libraries. Oneview Enterprise Platform offers a wide range of rich business service analytics capabilities that can be accessed directly via the platform or from Numerix-developed applications. This flexibility allows firms to build a combination of services and features unique to their organizational needs.

On the other hand, the Numerix CrossAsset library offers a comprehensive collection of models and methods, enabling institutions to price any conceivable instrument using the most advanced calculations. Users generate market-consistent valuations as they gain access to a wide range of calibration options. Numerix CrossAsset also gives the ability to deploy a unified pricing and risk solution for client’s complete derivative and fixed income positions across all trade types.
“Additionally, our unique hybrid-model framework supports the production of consistent scenarios among multiple risk factors; critical to producing robust pricing and risk valuation adjustments calculations,” says O’Hanlon.

In a specific customer engagement, The Reserve Bank of New Zealand (RBNZ) selected the Numerix Oneview enterprise pricing and risk analytics platform to transform their Treasury Systems strategy and future roadmap. Having engaged Numerix to achieve the goal, Numerix Oneview streamlined daily operational workflows across trade management, pricing and valuations, pre- and post-trade limits, market risk, counterparty credit risk, XVAs, liquidity and collateral management. Acting as the single source of truth for trades, valuations, and analytics, Numerix Oneview provided the consistency of analytics across the trading book that RBNZ required. It also supported the pricing and risk management needs of the front office as well as the middle office.

Cloud Innovation for Complex Derivatives

Numerix also helps financial services firms take valuation and risk calculations to the cloud with Numerix CrossAsset on Windows Azure. “Financial services firms can leverage our Azure-enabled technology to manage their portfolios and assess risk enterprise-wide by bursting pricing and risk calculations to the cloud,” reveals O’Hanlon. These solutions enable users to make Excel calculations in the cloud at the same time and distribute them across a grid, or a combination of both private and public cloud compute environments. Using the CrossAsset on Azure, clients can boost business agility, reduce capital expenditure, and quickly scale to meet the most compute-intensive pricing and calculation demands.

"The core of Numerix Oneview is rooted in powerful analytics within a real-time analytics platform for pricing, risk analysis, and trade management"

The journey of Numerix over the years reflects the forward-looking perspective of O’Hanlon, who inspires large-scale transformation and flawless execution with marked intuition and strong leadership qualities. With O’Hanlon at the helm, Numerix has successfully transformed into a global analytics software company operating from a single platform with a presence in 26 countries.

Keeping up with the theme of constant innovation, the coming years for the company will be integrating insights from advanced analytics to gain better operational efficiency across the enterprise. Numerix will continue to provide modeling consistency across the enterprise and make advanced analytics more accessible to key decision makers at both the desk level and within the C-suite. “As we continue to accelerate the development of Oneview, we are embracing an open, consistent architecture built on market standard technologies—allowing users to free their data, scale and solve complex business problems,” says O’Hanlon.

With such rich innovation roadmap, O’Hanlon emphatically states: “We continue to challenge ourselves, and we’re constantly pushing into new marketplaces, trying to build new technology that addresses the regulations fostering market changes.”

Company
Numerix

Headquarters
New York, NY

Management
Steve O’Hanlon, CEO

Description
Provider of innovative capital markets technology solutions and real-time intelligence capabilities for trading and risk management