OTC reforms present technology challenges for insurers

Wide-ranging changes to the the OTC derivatives market are leading insurers to upgrade their collateral management systems, often quite substantially. But the complex requirements and computational power needed is providing a challenge - not just for insurers but also for software vendors too. Clive Davidson reports

Profound changes are under way in the over-the-counter (OTC) derivatives market, which will have far-reaching implications for insurers that use swaps and other derivatives products to mitigate their risks. Pricing of even the most standard interest rate products has become much more complex since the financial crisis when the basis between the overnight index swap (OIS) rate and Libor blew out and diverged massively, leading to the need for multi-curve models to price even vanilla swaps.

But