REPRINTED FROM

RISK MANAGEMENT DERIVATIVES REGULATION

Risk.net December 2014

Murex Overall Number 1

Technology Vendor
For two years in a row

TECHNOLOGY RANKINGS

2014

Doing more, for less

Banks are trying to cut costs at a time when more is being asked of them and this means software vendors face the same
problem. The solution is to embrace cutting-edge tools and technology, as the winners of this years technology rankings testify.
By Clive Davidson

hen bank regulation changes,

so do banks; and when banks
change, software and systems
have to support them.
This is not a new story the sector has been
grappling with these challenges for much of the
past ve years but the intensity has stepped
up as implementation of the rules arrives, and
has been complicated by the fact that banks are
under huge pressure to cut costs. It means
vendors are having to do more without
charging more, which in turn means leaning
heavily on advances in technology, primarily
those driven by the internet, at every level of
their systems functionality.
Regulations such as the Dodd-Frank Act, the
European Market Infrastructure Regulation and
Basel III have transformed the way markets
operate. A product such as a swap might still be
dened as before, but the way a bank has to price
it, execute it, calculate and manage the risks, and
follow it through its lifecycle has completely
changed, says Maroun Edde, chief executive
ocer of Paris-based Murex, which topped this
years rankings with 11.4% of the overall vote.
Put simply, risk, capital and funding
considerations that might previously have
existed in the somewhat-separate world of the
middle oce have come crashing into the world
of the trader. In addition, many of them depend
on questions about clearing and collateralisation
that would previously have lived an entirely
separate existence in the back oce.
Traditional derivatives trading systems, with
the relatively discrete modules for front, middle
and back oce that mirrored previous market
practice, are no longer t for purpose neither
are specialist risk management systems, which
often run on the basis of overnight batch
processing. What is required instead is robust,

Many banks are now asking how they can undertake this massive
infrastructure change to rebuild their capital markets factories,
industrialising most of it while maintaining an essential degree of
exibility, and do it in the context of constrained budgets
Maroun Edde, Murex
high-performance calculation capabilities,
matched by high-speed, high-capacity data management, in an open architecture that
will integrate with banks infrastructure as
they transform their operations for the new
market conditions and all at signicantly

reduced IT costs.
Many banks are now asking how they can
undertake this massive infrastructure change to
rebuild their capital markets factories, industrialising most of it while maintaining an essential
degree of exibility, and do it in the context of

risk.net

constrained budgets, says Edde.

Inevitably, the answer has to come from the vendors. In response, the
vendors are overhauling their systems architectures and drafting in the
most advanced technologies from the internet world and other industries
complex event processing (CEP), in-memory databases, parallel processing, super-fast chips, cloud computing and more. Vendors claim these
tools can handle more calculations, more quickly, exibly and at lower
cost. Or, at least, not a vastly inated cost.
Parallel-processing approaches from programme design to the use of
networks of processors or specialist hardware such as graphic processing
units are now essential to cope with the scale of the calculations for
pricing and risk, which might involve hundreds of billions of calculations
just for CVA, for example.
With sub-second response as the target, there is no time to move data to
and from storage devices, so it must be held in memory another
technology that vendors are having to adopt to meet their clients
requirements. In fact, vendors are having to upgrade at every level of what
is known as the technology stack the hierarchy of components that
comprise a system, from the hardware, through communications, software
and data, to the nal output and its manipulation. In addition to
in-memory databases, parallel processing and CEP, the advanced technologies include high-bandwidth networking, parallel-storage mechanisms and
advanced data-visualisation techniques.

Remodelling for new markets

The way vendors are packaging these capabilities is changing too.
Although they still oer dedicated applications, such as equity derivatives
pricing or historical VAR calculators, the vendors are developing more
high-level, generic components and capabilities aimed at helping banks
remodel their operations for the new market regime.
Murexs Edde describes his company as a transformation enabler
summing up the role into which vendors are increasingly being thrust.
Murex already has a surprising number of such transformation-type
clients, where the initial engagement is with C-level executives and not
just trading desk or IT managers, he says: Its a massive change from ve
years ago.
One technology evolution that banks remain unable to fully exploit is
cloud computing. With its vast, on-demand resources, outsourced
maintenance and upgrades, and relatively low cost, cloud is theoretically
an ideal solution to the industrys current IT problems. Lingering security
concerns are one reason banks are holding back.
But it is the computing-without-frontiers model of cloud that is the real
stumbling block many regulators will not allow client data to leave a
banks jurisdiction. Temporary solutions include the use of
private clouds mini-clouds operated by the bank itself or a third-party
and located within the relevant jurisdiction or hybrids.
Where client data is not an issue, such as in testing new software or
models, many banks are already making use of public clouds, such as those
provided by Amazon, Microsoft or Google.
Many in the industry believe the advantages of public clouds and their
ubiquity in other industries will lead to a relaxation of data regulations.
We view private cloud as essential today, and public cloud as essential in
the long term. We are condent that at some point in the future there will
be the regulations that allow condential data on public clouds, so we are
working in the background to support that, says Murexs Edde. R

Reprinted from Risk December 2014

Overall
2014
1
2
3
4
5
6
7
8
9
10

2013
1
2
5
4
3
6
7
8
9

Vendor
Murex
Misys
Bloomberg
Calypso
SunGard
IBM Risk Analytics
Thomson Reuters
Numerix
Moodys Analytics
SAS

%
11.4
11.1
8.6
8.3
8.1
6.3
5.2
4.8
4.7
4.0

Pricing and analytics

2014
1
2
3
4
5
6
7
8
9
10

2013
1
3
4
2
5
6
7
9
8

Vendor
Murex
Savvysoft
Bloomberg
Misys
Numerix
Calypso
SunGard
Thomson Reuters
Pricing Partners
Fincad

%
13.1
11.9
11.5
10.9
9.6
7.5
6.4
5.2
4.6
4.5

Vendor
Murex
Misys
Calypso
Bloomberg
SunGard
Thomson Reuters
OpenLink
Ion Trading
SuperDerivatives
GFI Fenics

%
13.9
13.4
9.8
8.9
7.6
7.4
6.2
5.0
4.4
4.4

Trading systems
2014
1
2
3
4
5
6
7
8
9=
9=

2013
1
2
3
4
5
6
7
8
9
10

Enterprise-wide risk management market, credit,

counterparty, liquidity, aggregation, Basel III
Vendor
2014 2013
1
1
Misys
2
2
Murex
3
3
IBM Risk Analytics
4
4
SunGard
6
5
Calypso
7
7
Bloomberg
7
6
Moodys Analytics
8
8
Numerix
9=
MSCI
9=
10
SAS

%
13.4
13.2
11.3
11.1
9.5
8.8
8.4
6.0
4.7
4.7

Pricing and analytics

Commodities
2014
1
2
3
4
5

2013
1
2
3
4

Rates
Vendor
Murex
Bloomberg
Misys
Savvysoft
OpenLink

%
15.3
12.0
10.8
10.3
8.2

2013
3
2
1
4
5

Vendor
Bloomberg
Murex
Misys
Savvysoft
Numerix

%
15.1
14.7
10.5
9.7
8.5

2013
1
2
3

Vendor
Murex
Misys
Bloomberg
Thomson Reuters
Savvysoft

%
15.9
13.2
12.6
10.6
9.5

Vendor
Murex
Bloomberg
Savvysoft
Misys
Numerix

%
16.5
14.7
14.5
10.0
8.8

Equities
2014
1
2
3
4
5

2013
2
3
1
4
5

Vendor
Savvysoft
Murex
Bloomberg
Misys
Numerix

%
14.9
14.4
13.7
10.4
8.9

Structured products

Forex
2014
1
2
3
4
5

2014
1
2
3
4
5

2014
1
2
3
4
5

2013
1
2
5
3

Vendor
Numerix
Savvysoft
Murex
Bloomberg
Misys

%
16.2
15.7
14.8
9.9
9.4

Vendor
Savvysoft
Murex
Numerix
Misys
Bloomberg

%
15.5
15.2
12.2
10.6
9.1

Cross-asset

2014
1
2
3
4
5

2013
1
2
3
4

Inflation
2014
1
2
3
4
5

2013
1
3=
3=
2
5

HOW THE POLL WAS CONDUCTED

Risk polled thousands of banks, hedge funds, pension
funds, insurance companies and corporate treasurers
for this years technology rankings, and received 786
valid responses.
Respondents were asked to vote for the technology
vendors that provide the best product offering across
a number of categories, including enterprise risk management, risk capital calculation, trading systems, and
pricing and analytics.
Participants were asked to base their votes on

functionality, usability, performance, return on investment and reliability. Nominated technology companies were awarded three points for a rst-choice vote,
two for a second-choice vote and one point for a
third-choice vote.
Only technology end-users were allowed to vote.
Risk conducted a comprehensive due diligence process
and disqualied any votes that were felt to be unfair.
These include people voting for their own rm, or relatives of someone who works in that company voting

for the rm, multiple votes from the same person, multiple votes from the same IP address, proxy votes on
behalf of customers, votes by people who choose the
same rm indiscriminately throughout the poll, votes
by people clearly not involved in the business areas
covered by the poll, and block votes from groups of
people on the same desk at the same institution voting for the same rm.
The editors decision is nal in determining the
validity of votes.

risk.net

Trading systems front to back ofce

Commodities
2014
1
2
3
4=
4=

Inflation

2013
1
2
3
5
4

Vendor
OpenLink
Murex
Misys
Calypso
Bloomberg

%
14.8
14.6
12.9
9.5
9.5

2013
2
3
1
4
5

Vendor
Murex
Misys
Calypso
Bloomberg
SunGard

%
15.3
14.0
13.0
10.1
8.2

2013
1
2
3
4
5

Vendor
Misys
Murex
Bloomberg
SunGard
Calypso

%
16.8
14.7
10.3
9.6
9.2

2013
1
2
4
3
5

Vendor
Misys
Murex
Calypso
Bloomberg
Thomson Reuters

%
17.2
16.3
11.5
9.5
9.4

Credit
2014
1
2
3
4
5

Vendor
Murex
Misys
Bloomberg
Calypso

SunGard

%
17.1
15.2
12.8
10.4

8.5

2014
1
2
3
4
5

2013

Vendor

1
2
3
4
5

Misys
Murex
Calypso
Bloomberg
SunGard

%
16.7
15.1
12.0
10.5
8.5

Structured products

Forex
2014
1
2
3
4
5

2013
1
2
3
4

Rates

Equities
2014
1
2
3
4
5

2014
1
2
3
4

2014
1
2
3
4
5

2013
1
2
3
4
5

Vendor
Murex
Misys
Calypso
Bloomberg
SunGard

%
16.8
16.2
11.4
10.9
8.0

Vendor
Murex
Misys
Calypso
SunGard
Bloomberg

%
17.9
15.2
13.3
8.8
8.7

Cross-asset
2014
1
2
3
4
5

2013
1
2
3
5
4

Systems support & implementation

Systems support

System implementation

2014
1

2013
1

Vendor
Misys

%
15.8

Murex

14.5

3
4
5

3=
3=

Calypso
Bloomberg
Thomson Reuters

Reprinted from Risk December 2014

10.9
10.4
9.2

2014

2013

Vendor

Murex

16.9

2
3
4
5

2
3
5
4

Misys
Calypso
Bloomberg
SunGard

15.2
10.8
9.5
9.4

Enterprise-wide risk management

Enterprise-wide market risk management
2014
1
2
3
4
5

2013
2
1
3
4
5

Vendor
Misys
SunGard
Murex
IBM Risk Analytics
Calypso

Liquidity risk management

%
12.7
11.9
11.0
10.6
9.5

Enterprise-wide credit risk management

2014
1
2
3
4
5

2013
1
2
5
4
3

Vendor
Murex
Misys
IBM Risk Analytics
Moodys Analytics
SunGard

2013
1
2
4
3
5

2013
1
2
3
4
5

Vendor
Misys
Murex
SunGard
Calypso
IBM Risk Analytics

%
16.1
14.7
12.7
10.2
9.8

Basel III compliance

%
15.2
14.2
10.7
10.4
10.2

Credit value adjustment/debit value adjustment/

funding value adjustment calculation
2014
1
2
3
4
5

2014
1
2
3
4
5

Vendor
Numerix
Murex
IBM Risk Analytics
Misys
Calypso

%
15.1
14.6
13.8
10.4
9.6

Vendor
Murex
Misys
Calypso
IBM Risk Analytics
SunGard

%
15.1
13.9
11.0
10.2
9.5

2014
1
2
3
4
5

2013
5
3
1
4
2

Vendor
Moodys Analytics
Misys
IBM Risk Analytics
Murex
SunGard

%
14.2
12.8
11.7
11.1
10.8

Vendor
IBM Risk Analytics
Misys
Murex
SunGard
MSCI

%
13.5
13.2
13.0
10.6
10.4

Risk dashboards
2014
1
2
3
4
5

2013
1
3
4
2

Others
Limit checking
2014
1
2
3
4
5

2013
1
2
4
5
3

Central counterparty clearing support

Collateral management and optimisation

2014
1
2
3
4
5

2013
1
3
2
5
4

Vendor
Calypso
Murex
IBM Risk Analytics
SunGard
Misys

%
14.5
14.2
13.8
10.8
10.6

2014
1
2
3
4
5

2013
1
2
3
5
4

Vendor
Calypso
Murex
Misys
SunGard
Markit

%
15.9
13.8
12.1
9.6
8.6

High-performance computing
(including HPC servers, GPUs, FPGAs, cloud)
2014 2013
Vendor
1
2
3
4
5=
5=

Murex
HP Autonomy
IBM
3i-Infotech
Oracle
SAS

%
14.4
11.6
10.3
9.2
8.4
8.4

Asset and liability management

2014
1
2
3
4
5

2013
1
5
2
4
3

Vendor
SunGard
Misys
Murex
QRM
IBM Risk Analytics

%
15.3
13.3
13.0
10.7
8.1

risk.net

Hey, big
spenders
Out-of-date systems and Basel III are set to be the biggest drivers of IT spending in 2015, for respondents to the Risk technology
rankings with budget allocated primarily to market risk, data management and regulatory reporting. Clive Davidson reports

he complexity of the new

derivatives trading regime, plus
regulators focus on data
management capabilities, means
that although fewer rms are planning to
increase their spending in 2015, those rms
are planning to spend more. The 56.7% of
respondents that will increase spending is
down from 64.7% last year, but fully a
quarter plan to increase their spending by at
least 20%, with nearly 9% saying they will
at least double their investment in IT in the
next 12 months.
Out-of-date systems continue to be the
main driver of spending, with 33.4% of the
1,013 respondents to this years survey the
vast majority of them banks and brokerages saying they need to upgrade.
Although regulation overall is declining as a
driver, Basel III remains the second most
important factor, with 22.2% of respondents
citing it as their primary motivation. There is
also a slight up-tick in intended spending to
meet outstanding issues related to Europes
Markets in Financial Instruments Directive,
with 2.7% of respondents saying it is their
main driver compared with just 1.5% in the
past two years.
Market risk will get the largest slice of the
investment at 17.7% up nearly 2% on the
previous year. In contrast, the share going to
trading systems has fallen to 13.9% from

16.9%, while central clearing will get only

2.1% of the budget, down from nearly 8%
two years ago. This suggests banks have
made progress in adjusting to the new
trading practices introduced by the DoddFrank Act. Credit risk, meanwhile, maintains
a steady focus, with 12.1% of intended
spending going its way.
Of growing concern among rms is their
ability to validate their valuation and risk
models, with the Federal Reserve Board
breathing down their necks about poor
model governance, as exposed by its
Comprehensive Capital Analysis and Review
stress-testing programme (Risk September
2014, www.risk.net/2360692).
It is not the underlying data that is the
problem. Nearly 90% of respondents are
quite condent or completely condent in
the quality of the data that feeds their
models. But almost a quarter of respondents
to the survey say they are unable to properly
validate all of their vendor models. Of these
rms, 44.3% say the vendors are not
providing the information they need.
Mostly, it is a handful of vendors ve or
less that are the source of the problems,
although nearly 2% of rms put that
number up to 10 or more.
The issue has become so serious that nearly
a third of rms say proper validation
capability is now a make-or-break criterion for

Reprinted from Risk December 2014

model vendor selection 18.6% of respondents say they selected or dropped a vendor for
this reason over the past year, while a further
11.6% threatened to do so. Some vendors are
seeing this as an opportunity, with at least
one, New York-based Numerix, packaging
and commercialising its automated validation
technology to work with banks in-house and
third-party models (see pages 4951).
Data management will get the secondlargest slice of investment in 2015 16.4%,
up 3.4% from the previous year followed
by regulatory reporting with 14.9%. This
suggests the implications of the Basel
Committee on Banking Supervisions
principles for eective risk data aggregation
and reporting capabilities are starting to
sink in. The committee has been keeping a
particularly close eye on global systemically
important banks and the survey indicates a
good portion of banks 41.4% are within
six months of meeting the requirements.
However, 45.1% of respondents say it will
take them another one to two years to bring
their data quality and data aggregation
capabilities up to the levels expected by
regulators. And as an indication of the
scale of the eort some banks still have to
make, more than 10% say they are more
than two years behind, with nearly 2%
expecting to fall short for at least the next
four years. R

1 What is the primary business of

your company?
Universal bank/diversied
nancial organization

Out-of-date systems continue

to be the main driver of
spending, with 33.4% of the
1,013 respondents to this years
survey the vast majority of
them banks and brokerages
saying they need to upgrade

29.1%
11.5%

Banking retail

8.6%

Banking wholesale

14.5%

Asset management

No 43.3%

10.7%

Investment banking/brokerage
Insurance

2 Do you expect to increase your

spend on technology in 2015?

Yes 56.7%

4.1%
7.8%

Consultant

13.7%

Other (please specify)

0 5 10 1520253035
%

3 If yes, how much more do you

anticipate spending?
10% or less

4 What areas will you be looking to

invest most in?
12.1%

Credit risk

33.1%

Dodd-Frank Act

17.7%

Market risk
1120%

41.9%

2150%

16.2%

50100%
More than 100%

5.9%
5.6%

11.3%

20

30

40

50

6 Are you able to properly validate

all of your vendor models?

10
%

22.2%

Post-merger/acquisition

4.8%

Systems out of date

15

33.4%
18.1%

Other

13.9%

Trading

10

2.7%

Basel III

2.1%

Central clearing

8.8%

Mid

16.4%

Operational risk

10%

Emir

14.9%

Data management

2.1%
0

Liquidity risk
Collateral management
Regulatory reporting

6.7%

5 What is the main driver for

technology spend?

20

7 If no, are the vendors providing

the information you need?

10

20
%

30

8 How many vendors do you have

problems with?
0

44.7%
42.7%

12

No 23%

10.8%

35

No 44.4%
Yes 55.7%

40

610

1.2%

11+

0.7%

Yes 77%

9 Over the course of this year, have

you selected a vendor or dropped
an existing provider because of
validation shortcomings?
No, but we have
threatened to
cut a vendor

10 For risk modelling purposes, how

condent are you in the quality of
your underlying data?
Completely condent

18.6%

10

20

No

45.1%

66.2%

Yes

11.6%
0

20

Zero condence
40
%

60

80

10.7%

24 years

69.8%
Not very condent

50

41.4%

12 years

Quite condent

40

11 How long will it take to bring

your data quality/data aggregation
capabilities up to the levels
expected by regulators?
Six months

21%

30

12.5%
0.2%
0 10 20 30 40 50 60 70
%

1.8%

46 years

More than 6 years 1.0%

0

10 20 30 40 50
%

risk.net

OVERALL NUMBER 1
TOP TECHNOLOGY VENDOR
As the capital markets
industry undergoes a
profound transformation
on its way towards
recovered growth, Murex
emerges as the leading
technology partner of that
transformation

OVER 25 NUMBER 1 POSITIONS

OVERALL NUMBER 1
TRADING SYSTEMS FRONT-TO-BACK OFFICE
OVERALL NUMBER 1
DERIVATIVES PRICING & RISK ANALYTICS
ENTERPRISE-WIDE CREDIT RISK MANAGEMENT
BACK OFFICE
LIMIT CHECKING
IMPLEMENTATION EFFICIENCY
HIGH PERFORMANCE COMPUTING
AFTER-SALES SERVICE

TECHNOLOGY RANKINGS

2014

EMEA
BEIRUT
DUBAI

ASIA PACIFIC - CHINA

DUBLIN
LONDON

MOSCOW
PARIS

BEIJING
HONG KONG

SEOUL
SINGAPORE

AMERICAS
SYDNEY
TOKYO

NEW YORK
SANTIAGO

SO PAULO
TORONTO

MUREX, Murex logos and product names are trademarks of Murex S.A.S and Murex S.A.S reserves all intellectual property rights with respect to the trademarks. All other trademarks are the trademarks of their respective owners.