CTRM in a multi-asset class portfolio
A ComTechAdvisory Whitepaper
FIS AND ITS MULTI-ASSET-CLASS SOLUTIONS
FIS is one vendor that has specific energy and commodity solutions for various tiers and segments of the market, including Kiodex, XDM and Aligne. These software solutions have a large installed base in the commodities world and the company benefits from having a long track record of delivering and supporting energy and commodity-specific CTRM solutions around the globe. However, in its large portfolio of solutions, FIS also has two products that offer a potential solution for those engaged at the top end of multi-asset-class trading, risk and treasury – or are looking for real-time risk overlays on top of multiple, already existing platforms.
The first of these solutions is Front Arena. Front Arena is a robust and scalable platform that handles all asset classes – it is widely used by banks, asset managers, hedge funds, etc. – and yet already has a significant number of those customers utilizing it for any type of commodities as well. With trading and treasury coverage, the solution was initially used by banks for equities, FX, IR and more. It incorporates an order management system that connects to over 30 exchanges, which differentiates it from other similar platforms. On the commodities side, not only is it a proven solution for precious metals trading but it also supports a wide range of other commodities, such as power, natural gas and LNG, crude and refined products, coal and biomass, emissions and certificates, and gas and softs. It is a multi-unit of measure, supports multiple types of price curve, volatilities, many instrument types, and has a robust risk engine.
Many large merchant / traders, banks and industrials already utilize it. Indeed, one large bank switched to Front Arena from a legacy system to better support commodities, including some trading with physical delivery. Front Arena has front to back office functionality and includes functions like trading, position and risk management, P & L, settlements, confirmations and accounting. Front Arena is a solution that multi asset managers can switch to in order to reduce both the total number of solutions they use across trading and treasury and the total cost of ownership.
FIS also offers Adaptiv – a real-time risk platform. Adaptiv supports market risk, counterparty credit risk and comes complete with superb analytics. The analytics side includes the ability to do front-office pricing cost of trades( XVA), CVA capital requirements, and supports various IFRS regulations – for example, IFRS31 accounting regulations and others. Its market risk engine is an aggregation solution and supports the advanced risk models that larger multi-asset-class traders need to perform to make better decisions. On the credit side, it helps manage counterparty credit risk( CCR) for internal risk management and helps to reduce capital by using advanced capital models.
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