BST Awards 2023: Best buy-side risk management initiative over the last 12 months—Murex

Product: MX.3

Overview

Measuring market risk by way of value-at-risk (VaR) calculations, stress-testing, and back-testing is critical for buy-side firms in order to optimize portfolio allocations to counter market fluctuations and comply with client mandates and regulations. To run these calculations quickly, firms have traditionally invested in high-performance computing, representing hundreds of CPUs, which are active for a few hours and then otherwise largely idle. The alternative now is to utilize native cloud elasticity, which is more efficient from an IT infrastructure perspective and provides risk calculation on demand.  

We completed an upgrade to version 3.1.53 of Murex in April 2023 and leveraged the opportunity to introduce new elastic architecture capabilities for market risk analytics. Flexible scalability allows the system to meet the changing analytics demands of our business. We have been able to extend our market risk analytics to improve confidence intervals, which has allowed for investment decisions of greater conviction.”
Stephen Jones, head of IT, group finance and BSM, Momentum Metropolitan Holdings

The solution  

Murex has containerized the architecture of its MX.3 market risk platform to leverage the elasticity and cost model of the cloud to manage market risk calculations. MX.3 provisions hardware resources needed for just-in-time market risk calculations on the cloud and releases the infrastructure once the calculations are complete. Financial institutions can launch risk calculations any time during the day and pay only for what is being used.

Secret sauce 

What differentiates MX.3 from other similar risk platforms is its ability to automatically size the required infrastructure based on the calculations it makes. The sizing is calibrated according to exact needs and is changed as needed, leading to:

  • Optimization of the resources allocated to the market risk engine
  • Highest performance possible
  • The containerization of the risk calculations transforms market risk for the buy side from an IT (cost and focus) and a business perspective (on-request reports).

Recent milestones

  • Murex has containerized the architecture of its MX.3 platform. Market risk calculations are now run in containers orchestrated by Kubernetes.
  • The new architecture automates the provision of the desired number of cloud-based virtual machines and the deployment of market risk engines in containers to perform the required risk calculations. 
  • The market risk engines are re-run in case of failure and cloud resources are released when computations are complete. 
Risk managers don’t have to wait for the end of the day to get their reports anymore―they can launch their calculations and what-if scenarios whenever they want because the necessary cloud infrastructure is automatically provisioned on the fly. This flexibility is highly appreciated―market volatility has been very high during the last years with the pandemic, the war in Ukraine and the return of inflation.”
Arnaud de Chavagnac, head of product marketing, Murex

Future objectives 

Murex is assisting a number of its clients in the adoption of the above-mentioned cloud-enabled innovation, which will be extended to the firm’s reporting solution for the buy side. This will provide clients with improved intraday, end-of-day and end-of-period reporting, allowing them to manage all calculations required to produce relevant data points for regulatory reports or to feed dedicated regulatory reporting systems. It is also evaluating additional business solutions with variable and intensive workloads that can be reengineered according to the same cloud-centric architecture.

Why they won

Murex wins the category for the buy-side risk management initiative over the last 12 months, thanks to its outstanding its MX.3 market risk platform. Key to the Paris-based risk specialist’s win is the cloudification and containerization of MX.3, which in one fell swoop addresses many of the inherent weaknesses of on-premises-run risk platforms―hardware costs, performance and scalability, and ongoing maintenance. Gone are the days when Monte Carlo simulations were run for hours overnight. Now, MX.3 allows buy-side firms to run computationally intensive risk calculations on an intraday basis, harnessing any number of additional servers as and when they need to, providing risk managers with the granularity and transparency they need to make the most informed risk decisions.       

 

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IMD & IRD Awards 2024: All the winners

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