Numerix has completed the acquisition of TFG Financial Systems, a real-time risk, P&L and position management system provider.
The acquisition means that we can now offer real-time capabilities in our risk management platform and bring together front-, middle- and back-office risk in a single database and platform, according to Steven O'Hanlon, chief executive at Numerix. "We can now offer all our capabilities in a real-time system and that means that our clients (700+) will be able to leverage this around their existing legacy platforms in the front-office and manage risk in real-time," said O'Hanlon. "TFG’s capabilities also provides us with a framework that can be deployed by sell- and buy-side firms. From an industry perspective, most firms are not in the position of developing this kind of platform internally and are looking for outsourced opportunities, but the challenge has been that there aren’t many vendors out there offering this kind of solution."
TFG is a state-of-the-art software built on a real-time, distributed, fault tolerant, event-driven calculation framework with dynamic directed graph technology, said O'Hanlon. "We will now be able to offer the highest level of performance for front office real-time scenarios - spanning solutions for automated structured products distribution, trading, risk management and now a robust solution for hedge funds and fixed income market makers."
According to O'Hanlon, Numerix and TFG are already synonymous with "fast, robust and scalable products", and the deal "clearly exemplifies how we've continued to expand our next generation technology platform".
"We are already a leader in pricing and quantitative risk analytics," said O'Hanlon. "By acquiring TFG's event-driven buy-side and sell-side platform, we are expanding our position, and responding to market demand for cost-reducing architectures that combine hybrid data management, analytics, workflow and visualization."
According to Satyam Kancharla (pictured), chief product and strategy officer of Numerix a dependency graph is essentially a technology for connecting server systems that speak to each other in an event-driven real-time, efficient way. "The streaming Directed Acyclic Graph, or DAG technology, triggers modules only if data they depend on changes, maximizing efficiency and throughput," said Kancharla. "As such, the system can calculate VaR, Greeks and carry out stress testing on a sub-second basis, or price 25,000 interest rate swaps per second in volatile markets."
Kancharla also said that the focus on risk management and the front-office means that "we need to provide a service that is more responsive, that allows the integration of different functions like bringing risk management capabilities to the front-office for managing portfolio exposures".
"Buy-side firms are starting to adopt more and more SaaS risk and portfolio management software and technology, and this is a trend we capitalise on," said Kancharla. "From a technical perspective, the real-time element will allow institutions to make decisions and see the impact of market movements in their portfolios, and to respond quickly and accordingly to currency, and market movements triggered by global economic events, as well as provide the ability to access data to understand how these events can impact portfolios and trading books."
Martin Toyer, chief technology officer of TFG, said that to achieve true real time not only do you need to know what must be updated given a change, but you need to be able to parallelize it. "The TFG dependency graph will enable server systems to speak to each other in an event-driven, real-time way to react faster to changing events and data," said Toyer.
The new Numerix Oneview Asset Management (formerly TFG Complete), provides Numerix with a turnkey SaaS based real-time front-to-back office solution to immediately begin working with a range of new buy-side institutions, including hedge funds who operate global macro style strategies, as well as endowments, pension funds and sovereign wealth funds.
According to Jim Jockle, chief marketing officer, the new capabilities will help Numerix to continue to support firms in their diogital transformation. "We have been involved in the structured products business for some time now and we are committed to helping our clients in their digital transformation, which we did for instance with DBS Bank in Singapore when we plugged them into our Oneview Distribution," said Jockle. "Over the last few years our Oneview Enterprise Platform has continued to evolve and TFG provides us an opportunity to accelerate digitization across the Front and Middle office."
TFG's graph technology will also be central to future versions of the Numerix Oneview enterprise platform, according to O'Hanlon. Underpinning Numerix's technology architecture, Numerix Oneview will be the only independent provider of real-time trading and risk with a single source of data and analytics for front and middle office risk.
"We conducted considerable due diligence on many firms who have staked the claim to delivering real-time capabilities in the market," said O'Hanlon. "It's been well documented how many financial institutions have tried to develop real-time systems on their own and failed. Built utilizing standardized components like Python and a modern market standard data model, Numerix is providing technology akin to what firms like Goldman Sachs and JP Morgan are providing while remaining independent and unbiased."
According to O'Hanlon, the acquisition will leverage the richness of the firm's pricing and valuation capabilities, and bringing them together with the TFG platform. "70% of our clients are sell-side and 30% buy-side, and we see this as an opportunity to increase our buy-side coverage with a complete offering (front, middle and back-office) that will position Numerix differently in the market," said O'Hanlon.
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