HIGHLIGHTS
Client: Markaz
Objective
Build a complete options trading platform, while maintaining technology infrastructure
Requirements
- Outsource the options calculation engine for its trading infrastructure to a trusted third-party
- Identify a scalable and cost-effective analytics solution
"FINCAD analytics offered a perfect fit for our requirements and provided interoperability with Microsoft Excel and various software interfaces."
Hussein Zineddine, AVP for Equity Derivatives and Structured Products at Markaz
Background
Kuwait Financial Centre 'Markaz', established in 1974, is one of the leading asset management and investment banking institutions in the Middle East region. Asset management services offered by the Company include Investment Advisory Services, GCC and International Investments, and Private Equities. Markaz has become a pioneering force for the development of derivatives trading in the region, launching Forsa Financial Fund as the first and sole derivatives fund in Kuwait and the Middle East.
Challenge
With the launch of Forsa, Markaz's mandate was to build a complete options trading platform and maintain technology infrastructure. Markaz decided to build the required infrastructure internally and use third-party analytics to implement the required underlying valuation and risk pricing models. Markaz required industry standard analytics that were fast, accurate, robust, transparent and scalable to accommodate trading growth, as well as functionally for modeling their required transactions.
Solution
Markaz selected FINCAD's proven industry standard analytics. T. Zineddine explains, "FINCAD Analytics offered a perfect fit for our requirements and provided interoperability with Microsoft Excel and various software interfaces. We evaluated different vendors and the FINCAD analytics library was by far the most comprehensive. The math documentation was complete and accurate, the models were robust and very fast for pricing and risk assessment of hundreds of options simultaneously across various strikes and different maturities. To top it off, FINCAD's client services team was very knowledgeable and responsive to our inquiries."
Results
- Calculation Speed: Markaz is now able to quickly price a high volume of options with varying parameters. This ability is key, as timing is a critical force in Market Making.
- Robust Coverage: Markaz now has access to a comprehensive fully-tested pricing library with over 1,600 functions built on robust algorithms.
- Accuracy: Using FINCAD, Markaz can obtain highly accurate values - price and risk statistics – that are based on proven and accepted industry standard models.
- Scalability: Markaz can scale their projects in a cost effective manner across a higher number of end users and a changing IT infrastructure that can accommodate Excel.
- Flexibility: FINCAD's flexible models enable Markaz to conduct various ad hoc analyses across front office trading, middle office risk management, control and back office functions for standard exchange traded options.
Looking Forward
The breadth of coverage FINCAD provides will continue to provide great value to Markaz as a solution for ad hoc valuations of various trades of both conventional and Islamic financial structures.
"The analytics library is consistent across FINCAD solutions and the FINCAD developers' interface is very user friendly – it simply required our developers a few hours to generate core code and integrate it within the pricing system."