Swiss cloud platform and service provider for banks, wealth managers and investment firms, Avaloq has signed an agreement to acquire 100% of Zurich-based Derivative Partners, an independent information and data provider for structured products and derivatives in Switzerland.

Derivative Partners has been a service provider for the industry in Switzerland and Europe for over 15 years including market information, tools, research and calculations for complex financial products.

Juerg Hunziker (pictured), Avaloq’s group CEO, said Derivative Partners has established itself as a ‘true market leader and competence centre’ for analysis of structured financial products.

 “The firm’s extensive consulting capabilities and know-how around structured products are a natural fit with Avaloq’s existing business service offering, and the acquisition underpins Avaloq’s vision of reinventing the financial experience in a fully digitized, always-on and data-driven world through powerful data analytics,” he said.

In addition, Avaloq clients will benefit from the newly acquired competence in the analysis of data, valuation and media in the area of structured products as well as new services such as lifecycle management for structured products, andindependent risk figures and price valuations for structured products, said Hunziker. He said, however, that a trade platform “is not in scope at this point in time”.

“However, Avaloq is always on the lookout for interesting market opportunities and further growth potential may result from the acquisition of Derivative Partners at a later point in time,” he said. 

Under the terms of the agreement, Derivative Partners will continue to operate as an autonomous entity for the foreseeable future, with all staff retained. Detailed financial terms are not  disclosed.

‘Avaloq has grown into the world’s foremost provider of digital solutions for banks and wealth managers, with an unprecedented, and growing, portfolio of clients in Europe and Asia,’ said Daniel Manser (below right), CEO, Derivative Partners. ‘By becoming part of the Avaloq group, Derivative Partners’ technology will be fast-tracked to a far larger audience…”

For Avaloq, the acquisition places the firm at the forefront of utilising differentiating data for structured product and ETF markets on its platform. With Derivative Partners’ analytical services, Avaloq will now be able to offer independent valuation, trading and management of highly complex financial instruments at a time when their use by banks and wealth managers is becoming increasingly more relevant.

Long-lasting record

Established in 2000 and led by Manser and COO Patrick Walther, Derivative Partners provides solutions for structured products to more than 40 market participants including issuers, private banks, asset managers and exchanges with valuations of option-linked securities and complex financial products.

In addition, the firm calculates regulatory figures and portfolio management ratios as well as third-party valuation models and provides quantitative support for investment banking and trading divisions. Its range of services further includes product governance, life cycle management solutions and media services.

‘Optimised and quality-assured data is used for clean, straight-through processing, improved services and more precise insights, and we know that superior data models are absolutely critical for the future of the global financial services industry,’ said Hunziker. ‘The integration of Derivative Partners’ functionalities is a compelling and differentiating advantage for our Avaloq ecosystem and we will now build on this ability to handle the most complex financial instruments for the benefit of our clients and all our stakeholders.’

Derivative Partners has been the calculation agent for the Swiss Structured Products Association (SSPA) since 2013 and for the European Structured Products Association (Eusipa) since 2012.

After offloading its derivative.com multi-issuer trading platform to Vontobel in 2014, the company went through a management buyout by managing partner Daniel Manser and Patrick Walther who acquired a majority stake held by a group of shareholders around founder Eric Wasescha, now at Vontobel.

The firm has since then focused on its structured products data for Switzerland which is supported by a partnership with the Swiss Six Exchange, as well as in supporting the buy-side channel with educational learning modules to provide a comprehensive overview and a better insight into structured products.

Avaloq, for its part, has also been connected to the structured products market and was one of the parties behind the failed launch of an integrated multi-issuer investment products distribution system (IPDS), by Leonteq, DBS, Avaloq and Numerix - known as the Land initiative.