The psychology of markets is inherently contradictory. Markets are, after all, comprised primarily of buyers and sellers—there cannot be an exchange, a venue, or even a trade without both. When it comes to managing risk, the biggest threat to both buyers and sellers isn’t geopolitical or socioeconomic events, regulation or even cost, but the counterparties themselves.
Accurately measuring and containing the risks posed by each side of a trade to the other, known as counterparty risk or XVAs, has become the preeminent challenge in modern risk management. Much of the damage done during the global financial crisis of 2008, for instance, was exacerbated by the inability of firms to quantify their exposures to each other, leading to catastrophic results and the failure of a number of the industry’s most famous names.
Along with mathematical modeling, modern technology has brought XVA products to previously unforeseen levels of sophistication. TriOptima’s triCalculate business, which wins the category for the best implementation at a sell-side firm in this year’s Sell-Side Technology Awards, is one of the leading firms in this drive, as evidenced by its recent successes. One of these, in particular, was an implementation at a major eastern European bank, which asked to remain anonymous for compliance reasons.
Part of TriOptima’s success in this category was down to the methods of implementation inherent to triCalculate’s design. In the past, risk management software—and in particular, computationally intensive software such as counterparty risk calculators—was cumbersome and challenging to implement. Where triCalculate shone for the bank was its ability to deploy quickly, and with minimal impact to existing infrastructure. Its web-based graphical user interface allowed the bank to load its data and send it directly via an application programming interface to triCalculate for processing through its services. There was no hardware needed to be wheeled in and installed at the bank’s server rooms. That, in an era of cloud and managed services, may not sound particularly revolutionary, but considering triCalculate’s deployment across the bank’s front, middle and back offices with no lock-in beyond quarterly billing, it’s an impressive feat. All too often, traditional vendors have sought to lock in clients through elaborate installs that take as much work to remove as they do to implement. With its forward-thinking approach to technology, as evidenced by this implementation, triCalculate has managed an elegant fusion of a service model with modern, efficient technology.
TriCalculate’s win in this category follows that of SmartStream Technologies, which was the victor in the 2018 program.
The founder and CEO of Imperative Execution looks at how trade execution is changing and what that means for the buy side.Subscribe to Weekly Wrap emails
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