Introduction

Technology has always been critical to development of the derivatives market. Without the PC, the development of spreadsheets and the writing of elementary pricing and risk management programs by traders, the interest rate swaps market would have struggled to reach anywhere near its current levels. As of June 30, the outstanding notional of interest rate derivatives, including interest rate swaps, options and cross-currency swaps, reached $347.09 trillion, according to the International Swaps and Derivatives Association.

Technology has continued to develop hand-in-hand with the derivatives market - as systems have become more powerful, so banks have been able to price and risk manage ever more complex products at ever faster speeds. Grid computing now enables banks to run risk reports in a fraction of the time, quantitative models can apply certain trading strategies without the intervention of a human trader, and algorithms can execute client orders in the blink of an eye.

In this month's issue of Risk, we once again publish our annual software survey - an update of what's new across market, credit and operational risk, trading and analytics and Basel II and IAS 39 compliance systems. Also this month, we publish our annual technology rankings. Once again, Paris-based Murex tops our survey, which was completed by banks, hedge funds, corporate treasurers and asset managers. But several other vendors, including Algorithmics and Savvysoft, are breathing down its neck. As one would expect given the rapid expansion of the derivatives market and the importance of technology to its growth, competition is fierce.

Nick Sawyer, Editor.