Banks trial CDO structuring tool

Two unnamed banks are trialling a new online version of Brighton-based financial technology provider Codefarm's Galapagos credit structuring tool. Jeremy Mabbitt, managing director of Codefarm Software in London, describes the clients as "high-volume users", although he did not identify them.

Galapagos Structurer helps automate and optimise the process of structuring collateralised debt obligations. "Given a universe of credits, including pricing and rating information, and the investors' requirements, it will generate the best possible portfolio in order to maximise the spread," says Mabbitt.

Codefarm originally thought the online version of Galapagos would appeal more to low-volume issuers because of the charging structure. "It's a usage-based charge so it can be cost effective even if you're only issuing low volumes," explains Mabbitt.

However it has other advantages that may have appealed to new users. One main difference between it and the former on-site version, which has to be installed at a user's office, is that new upgrades are instantly available.

It is also much quicker to get started: "It can be operational within days as IT projects are not required to implement it," says Mabbitt. The data requirements to use the online version are minimal: customers may paste the data into the Galapagos terminal, or there is an option to automate more of the process through an interface.