Innovation or Re-Invention? Technology Developments in OTC Derivatives
New regulation has spawned an era of innovation but not every product is a bright shiny new invention.
Ever since the financial crisis thrust derivatives into the spotlight, technology vendors have been scurrying to find new solutions to meet the new regulatory regime. The landscape is still evolving with some products being an enhanced variation on a theme while others such as Blockchain are set to push the inimitable envelope in the future.
Either way, the technology required is a far cry from the pre-2008 days where the focus was mainly on booking, accurate pricing with familiar analytics such as Libor-based risk-neutral valuation and end-of-day risk parameter/metrics including value at risk (VaR). Systems also churned out robust market data feeds, straight-through processing (STP) for all pricing, risk management, documentation, accounting and post trade life-cycle events management.