Sell-Side Technology Awards 2016: Best Sell-Side Market Risk Product— MSCI

Capital markets firms need a platform that can give them a wide view of the markets they are involved in and help them execute proper risk management.

It seems fitting that in the first three years of the Sell-Side Technology Awards no vendor has been able to win the honor more than once. LCH.Clearnet, OpenGamma and RiskVal Financial Solutions have all taken a turn in the winners’ circle, and this year yet another vendor has taken the crown for the first time in the category: MSCI, thanks to its RiskMetrics RiskManager offering. 

MSCI is no newcomer to the risk management space. The New York-based vendor has been around for over 40 years, offering research-based analytics and indexes. However, it was the firm’s RiskMetrics RiskManager that specifically caught the judges’ attention in the market-risk space. The tool is a software-as-a-service (SaaS)-based offering that provides users with risk information across multiple asset classes and a wide range of instruments, including commodities, equities, fixed income, private real estate, private equity, foreign exchange, mortgages and structured credit. Value-at-Risk (VaR) simulation methodologies, robust stress testing, sensitivity analysis and flexible instrument pricing models are incorporated into RiskMetrics RiskManager, allowing users to set up custom reports, run ad-hoc analyses, perform exception management to find areas of risk, design stress-test scenarios and perform what-if analysis to rebalance or hedge a portfolio.

Giulio Panzano, managing director at MSCI, says what differentiates the product from other solutions in the space is that it’s multi-asset-class, it has a depth and breadth of risk statistics, it is flexible in terms of methodology, pricing models and parameters, and it has integrated market data and terms and conditions that encompass millions of time series and assets. 

MSCI has also included some enhancements over the past year to the platform. Private assets modeling for private equity and real estate was added in order to extend its product coverage to meet the needs of complex and varied client portfolios, according to Panzano. Upgrades were also made to stress-testing functions in order to meet stringent regulatory requirements like the Federal Reserve’s Comprehensive Capital Analysis and Review (CCAR) and the Bank of England’s Prudential Regulation Authority, Panzano says.

MSCI is no newcomer to the risk management space. The New York-based vendor has been around for over 40 years, offering research-based analytics and indexes. However, it was the firm’s RiskMetrics RiskManager that specifically caught the judges’ attention in the market-risk space.

Looking ahead, investments will continue to be made to fixed-income analytics, says Panzano. Specifically, MSCI will introduce a prepayment model for agency mortgage-backed securities and collateralized mortgage obligations. Modeling of bank loans, collateralized loan obligations, contingent convertibles, and new Barra fixed-income factor model capabilities will also be integrated.