Currency options pricing system SuperDerivatives has incorporated a deal capture function into its core pricing product. The company says this was done specifically at the request of customers in the wake of events at AllFirst Financial.
David Gershon, CEO of SuperDerivatives, says, “The AllFirst experience has served as a pertinent reminder that errors, intentional or otherwise, can easily creep into the trading process. The ease of deal entry from the SuperDerivatives pricing platform will remove at least some of the potential for errors and will increase the efficiency of processing trades.”
The company says the new facility is available to clients on request and utilises the latest technology to enable SuperDerivatives to be incorporated seamlessly into clients’ existing risk management systems. This allows options to be priced and processed to a customer’s back office whenever a deal is transacted, which lessens the chances of misplaced deal tickets and other error-derived risks. The deal entry page resides locally and can be combined with any risk management system that clients already have in place.
Gershon reveals the company has been approached by non-traders in the financial sector for access to the system. “We have also been asked about supplying SuperDerivatives to risk managers so that they can run random checks on the valuations their systems are providing for option portfolios,” he says.
“Because of the difference that often exists between the theoretical values produced by most systems and the price that options actually trade at, portfolios can easily be over or undervalued. New accounting regulations such as FAS133, demand that an institution’s derivative positions are accurately marked to market. SuperDerivatives allows this to be done independently,” he adds.
The company says the enhancements are the latest step towards its ultimate goal of providing a one-stop shop for the trading and monitoring of all types of currency options. Gershon states, “It is a market-proven system that is available at a reasonable and known cost. The fact that it is so easily customisable makes it very attractive to all organisations, including those that in the past would have sought to develop their own.”
The company has also added more functionality to the site. Customers now have the choice of overriding the site’s volatility levels. With a single click, clients can privately input volatility, spot and forward levels from their own local databases into the system, rather than use SuperDerivative’s live feeds. The company says this function means that the system can effectively serve as a broadcasting tool of accurate option prices for a whole client organisation.
Gershon promises that SuperDerivatives will continue to evolve its site according to customer feedback. “For instance,” he says, “The deal capture facility is not something we would necessarily have considered. We have done so because it was something some clients said would be useful to them. Clearly now, there is an even more powerful reason for institutions to fully understand their risk, and the best way to do this is by sourcing accurate and independent prices to make sure portfolios are properly marked to market.”