Single pricing engines key to driving down business costs

The increasing role of technology has been a key trend in the two decades Asia Risk has been in existence. In this part of our Firms of the Future series we profile Misys – a technology vendor that has played a leading role in helping firms adapt to changing regulatory and market demands

Alexandru Gomoiu, Misys

Over the last few years, Misys has been reorganising and revamping its software suite under the 'Fusion' brand. It has gathered the Opics, Summit, Sophis and Kondor+ systems, as well as its enterprise risk and back-office systems, together as FusionCapital.

The company has a combined user base across these systems of more than 800 organisations. Misys has been making the integration of these existing elements of its capital markets software suite easier, but more importantly, it has also been developing a new set of generic components that will sit on top of the trading systems – not only Misys' own, but banks' in-house or other third-party systems.

These components provide key functions, centralised with access across the organisation, providing consistency and performance. So far, these components include pricing, curve generation, collateral management and back office.

Misys is positioning this componentised approach as an alternative to the single centralised platform strategy advocated by major rivals. A critical benefit of the component approach, claims the company, is that it avoids banks having to 'rip and replace' existing systems, and instead offers a way of supplementing and extending existing infrastructure with central standardised resources built on modern technology.

To meet the performance challenges of centralised pricing and sensitivities calculation for pre-trade risk measures and the management of large complex portfolios, Misys is deploying several advanced computing technologies, including graphical processing units (GPUs), in-memory databases and cloud computing.

Institutions that can rejuvenate their technology and rationalise their business models will gain advantages more quickly

"Financial institutions find themselves at a critical moment facing many pressures. They need to move away from desk-based disparate systems, but are hampered by their existing technologies making it more difficult to transform their business," says Alexandru Gomoiu, head of business solutions group, Asia-Pacific, for Misys who is based in Singapore.

"Institutions that can rejuvenate their technology and rationalise their business models will gain advantages more quickly. For example, with a single pricing engine across desks and departments, institutions are able to value with consistency, flexibility and transparency across their business."

Gomoiu adds: "Our next-generation trading platform, Misys FusionCapital, enables financial institutions to improve front-to-back trade processing with cross-asset coverage and enterprise-wide consistency. It helps institutions in the region to trade, analyse, simulate and execute more rapidly, while improving risk controls. Better connected, simplified and more agile systems will help firms to reduce costs and risks, and improve return on earnings."

Financial institutions find themselves at a critical moment facing many pressures. They need to move away from desk-based disparate systems, but are hampered by their existing technologies making it more difficult to transform their business

Alexandru Gomoiu, Misys

Gomoiu cites an Asia-Pacific central bank that contacted Misys needing to process a higher volume of treasury instruments than it was previously capable of. The company was able to implement FusionCapital modules not only to satisfy the central bank's primary requirement, but also to provide further functionality.

"The central bank's back office will use the system's event-based workflow manager to confirm deal and payment information with counterparties and send automatically generated confirmations. Our system also provides the bank with an enterprise risk management framework, including performance and return attribution analysis, portfolio and currency compliance limits and policy controls," says Gomoiu.

In another instance, Taiwan's Chang Hwa Commercial Bank has recently implemented Misys FusionRisk's historical simulation VaR functionality, along with back-testing and stress testing for all treasury products. Front, middle and back office users can now access the same pricing results, with end-of-day mark to market completed within 20 minutes, claims Misys.

"There will continue to be consolidation amongst Asian banks looking to rationalise their operations and focus their business on their key differentiators. They will need to make sure they reduce the overall total cost of IT ownership and integrate the various existing best-of-breed solutions. And they will need to do this while improving and modernising their IT infrastructure in the context of the consolidation that is happening in the region," says Gomoiu.

Founded in 1979, Misys has grown through acquisitions and product development to provide a broad portfolio of financial services software covering retail and corporate banking, lending, treasury, capital markets, investment management and enterprise risk.

The company's derivatives trading and risk systems business has been focused on its Opics system, plus the acquisition of Summit, Sophis and Kondor+, each with established client bases in Asia, as well as home-grown enterprise risk management software that has gone through a number of transformations over the years.

In 2012, the company was bought by private equity firm Vista Equity Partners. Today, Misys has more than 2,000 institutional customers across 130 countries, including 47 of the world's 50 largest banks, and 12 of the top 20 asset managers. Misys' head office remains in London, with 16 offices in Asia-Pacific, from Australia to Vietnam, while much of its global development and support is handled in the region, especially in India and China.