Pricing and analytics: equities – Finastra

Finastra has been recognised with the Risk Markets Technology Award for Pricing and analytics: equities, a testament to its platform, Sophis. This solution is supporting institutions as they refine their tools and strategies for equity and equity derivatives trading, addressing complex market demands with precision and flexibility.

Sophis is designed to integrate portfolio management, pricing analytics and risk management into a unified solution. By offering real-time pricing, advanced analytics and stringent data controls, Sophis helps financial institutions navigate the challenges of trading and risk management with agility. Its focus on equity and equity derivatives trading, including structured products and delta one offerings, reflects Finastra’s expertise in market dynamics and client needs.

Equity markets have undergone significant transformations over the past decade, characterised by declining volatility and intensified regulatory oversight in the US and Europe. These shifts have compelled market participants to adopt systems that are not only operationally stable but also highly flexible and transparent. Sophis addresses these demands through an integrated approach based on a scalable architecture, offering functionality that covers front-office trading and hedging activities, and a wide range of risk measures for front-office users, as well as for risk managers. This comprehensive range of features allows institutions to maintain compliance with stringent regulatory standards while optimising operational performance.

Sophis caters to the full spectrum of equity and equity derivatives activities, from traditional trading to the creation of sophisticated structured products. The platform supports listed and over-the-counter markets, enabling firms to build complex structured and hybrid products seamlessly. Real-time analytics allows users to recompute data intraday and attribute profit and loss (P&L) in real time, so institutions can respond swiftly and confidently to market developments.

Sophis offers a comprehensive suite of risk management tools. Risk measures, including sensitivities, stress tests and value-at-risk, allow institutions to assess their exposure across a variety of economic scenarios. The system’s customisable pricing models, developed by an in-house team of quantitative analysts, provide the flexibility to tailor analytics to firms’ unique requirements. Sophis’s powerful simulation tools offer further adaptability by enabling users to explore various scenarios and make informed decisions with minimal risk exposure.

Over the past year, Finastra has introduced several enhancements to Sophis. The platform’s asset class coverage has been significantly broadened, incorporating advanced equity, commodity and foreign exchange derivatives such as autocall variations and mini-futures delta one instruments. These additions have strengthened Sophis’s capabilities in corporate action management, allowing for seamless handling of events such as mergers and spin-offs, even in multi-underlying derivatives.

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Risk transparency has also been a focal point of recent developments. Sophis now offers advanced P&L reporting features, with metrics such as FX gamma and correlation effects providing deeper insights into portfolio performance. Enhanced operational efficiencies have been achieved through integrations such as the collateral management connector with CloudMargin and the implementation of digital reporting tools leveraging Power BI. Additionally, technological advancements such as memory optimisation and telemetry for data monitoring have enhanced the platform’s scalability and reliability.

Looking ahead, Finastra is well positioned to address the evolving needs of the equities market. Regulatory pressures and the increasing use of alternative data are driving institutions to adopt platforms capable of processing large volumes of real-time information while delivering robust analytics and a customisable user experience. Sophis meets these requirements with its integrated view of analytics, support for alternative data sources and modular design.

Sophis’s flexibility in deployment further underscores its adaptability. Whether institutions opt for on-premise implementation, private cloud hosting or public cloud services, Sophis offers a range of options to suit diverse operational requirements. Its open architecture and application programming interface integrations enhance connectivity and foster innovation.

Judges said:

• “Sophis’s risk management and P&L analytics are well known and widely used.”
• “Sophis demonstrates solid innovation with its integration of CloudMargin and enhanced corporate actions management.”
• “The platform’s recent advancements in the P&L Explain provide valuable insights for users.”
• “A reliable and robust solution with noteworthy research and development enhancements.”

Xueyan Tang, senior manager, product management at Finastra, says:

“Finastra clients choose Sophis for its highly scalable modern technology and fast onboarding options, for its integrated front-to-back solution and for its extensive cross-asset analytics. An important differentiator for these clients is the ability to meet their specific customer requirements with the flexibility that Sophis offers.”

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