2017 AFTAs Winners' Circle: Imagine Software

Tell us about your Real-Time Risk & Compliance (RRC) solution—what are the challenges it’s looking to address?

Lance Smith, CEO, Imagine Software: RRC grew out of our clients’ needs to manage a variety of real-time regulatory demands, including limits monitoring and intra-day risk reporting. But, as regulations evolved and became more complex, our clients asked for a forward-thinking solution that would deliver not just regulatory compliance, but enable them to achieve consistency between intra-day trading and end-of-day P&L and risk metrics across all asset classes—while trading many millions of trades per day for thousands of accounts. The resulting product, RRC, is now in use by some of our clients and is in beta testing by others. It tracks regulatory limits and investment risk, identifies potential intra-day breaches of capital utilization limits, and performs institutional-grade due diligence across asset classes firm-wide. 

The platform includes a number of analytics capabilities, from stress-testing historical scenarios through to real-time snapshots of positions. How was this accomplished on a technical level?

Smith: It was a world-class challenge that required a complete re-architecting of our already-robust risk engine. We worked hand-in-hand with our users, reviewing the existing risk and compliance parameters and planning for future iterations. It was a weekly, often daily collaboration, and Imagine provided development prototypes, including liquidity calculations and working interfaces. Enhanced performance was achieved by utilizing a highly-efficient mathematical modeling of securities, coupled with parallelization of computations across farms of compute servers. The implementation process was meticulous, and the end result is truly best-of-breed.  

As a real-time risk engine combined with a managed data service—Imagine’s Global Security Master contains the data on every listed security—RRC significantly lowers the cost of monitoring client risk and remaining compliant, and it scales for growth. RRC integrates with legacy systems, effectively sitting on top of a firm’s own technology system to deliver streaming real-time summaries of trades, alerts and operational data, key metrics, such as value-at-risk/net-asset values (NAVs), best or worst profit-and-loss or NAVs, or totals across the firm, and with unlimited additional granularity. Our clients can also create new calculations on their own, such as elaborate stress-tests across multiple factors utilizing the Imagine Financial Platform.

When it comes to effective risk management, what do you see as the main challenges at present for your clients, and where do you see potential areas of concern in the future?

Smith: Regulatory challenges will continue to evolve, as will the need to manage the real-time risk on high-speed trading, as velocities continue to rise. High performance across the spectrum of traded securities—including over-the-counter—will become a requirement, no longer a “nice-to-have.”

What can we expect from Imagine in 2018?   

Smith: More innovations! Enabling our clients to compute their own margin in 2017 opened up a new way for them to better manage capital and create efficiencies. Already slated for this year are customized solutions around cross-margining, netting and offsets. Using risk portals powered by Imagine, our clients can provide their clients with real-time margin alerts and risk management tools so that they can take the appropriate actions to forestall an unwelcome margin call. That ability gives our clients a critical competitive advantage. We can also expect developments around cryptocurrencies as the exchanges begin to offer futures and they emerge as an asset class.