Pricing Solutions for OTC Derivatives and Structured Products

by Cubillas Ding, May 7, 2009
Product Trends/ Reviews
Global, Asia-Pacific, EMEA, Latin America, North America

Abstract

The need for greater transparency in pricing and valuation functions is increasing. Celent urges firms and solution providers to re-examine their piecemeal approach to implementing pricing analytics and models in order to reduce 'weak links' in the overall process.

In a post-crisis era that is moving towards financial reform, we are seeing unprecedented levels of scrutiny and requirements for firms to show procedural consistency in their complex deal pricing and portfolio valuation activities. For firms at the forefront of change, this translates to, at the very least, getting the building blocks of pricing technology and data infrastructure streamlined to adequately satisfy the requirements of a myriad of end-users and control stakeholders, as well as demonstrating a tight degree of accountability in the price derivation process.

In this report, Pricing Solutions for OTC Derivatives and Structured Products: Evaluating the Vendor Market, Celent examines the state of the market for pricing solutions and the innovative vendors that are helping firms build out and improve their pricing infrastructure and analytics technologies.

The key issues explored and addressed in this report include:

  • What are the key lessons learned from pricing endeavors and valuation failures of institutions?
  • What is the state of firms’ efforts in their deal pricing and securities valuation activities?
  • What dynamics are operating in this changing pricing solution market, and how will they evolve?
  • If a firm is evaluating solutions for securities pricing and valuations, what does it need to know about the main players?
  • What tactical and strategic considerations should a firm be thinking about in solution selection and implementation efforts?

"In this new world, loose accountability arrangements, black box approaches and ad hoc pricing practices are no longer acceptable," says Cubillas Ding, Celent senior analyst and author of the report. "Regulation, accounting, audit and risk management considerations now converge to weigh heavily into the overall equation."

This report delivers the most up-to-date and detailed analysis into pricing and risk practices associated with OTC and structured markets after the credit crisis, as well as its implications for firms. The report examines eight vendors and their solutions in this space: Andrew Kalotay, FinCAD, Numerix, Pricing Partners, Quantifi Solutions, SciComp, SunGard Reech, and UnRisk / MathConsult.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

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