RBC in global switch to Risque system

Royal Bank of Canada (RBC) plans to run Sophis’ Risque cross-asset risk management software across its global capital markets businesses, as it seeks to minimise exposure to operational risk, RiskNews can reveal.

The software will integrate processing of market instruments across the bank’s global arbitrage trading, structured products, synthetic fund of funds and convertible bond desks, and is designed to give RBC greater controls over its global business from front to back office.

Risque is running at the group’s London office, and will be fully expanded to New York and Tokyo in staggered stages until it is fully operational by the end of 2007. “We run the derivatives business globally, and it just made sense,” Peter Sanchez, RBC’s global head of operations, capital markets and securities, told RiskNews.

Sanchez said dealers risked being forced out of the market if they failed to boost efficiency and control over the higher volume of products as the derivatives markets expanded, although he added that innovation in the market had allowed some banks to run inefficiently in the past.

“The rationale behind it is putting in a certain amount of controls and infrastructure around these businesses. It will allow us to grow in a more scalable fashion, increasing margins along with volumes,” said Sanchez. “We’ll be able to grow the business in an appropriately controlled way, minimising operational risk.”

Almost 50 global financial institutions have so far implemented the software platform, including Abbey National, Barclays Capital, Calyon, HSBC and Rabobank.