Parameta Solutions and Numerix Team Up

TP Icap’s Parameta Solutions and OTC analytics and pricing company Numerix, have announced a new partnership to develop automated, independent, fair valuations of OTC derivatives to market participants.

The firms say the partnership “promises to provide a cost efficient, differentiated offering to a high growth sector”. They add that with mounting regulatory requirements linked to accounting standards, and an increasing requirement for greater model transparency and transaction substantiation, data reliability and transparency are more important than ever. The introduction of FRTB (Fundamental Review of the Trading Book) has reinforced the need for banks to have access to high quality data in order to accurately mark their OTC positions.

The two firms say they are working together to develop a solution to provide a more effective way of valuing OTC derivatives. The collaboration follows the Bank for International Settlements recent data showing that the notional value of outstanding OTC derivatives rose to a record high of $632 billion last year.

“As the regulatory requirements for third party outsourcing, transparency, and risk factor liquidity have increased, the challenge of obtaining accurate and up-to-date valuation services has become more difficult,” says Ovie Koloko, chief product officer at Parameta. “Simultaneously, technological changes are forcing financial institutions to reconsider their existing architecture and the data sources driving critical applications. By working together with Numerix, we believe that we can offer a truly unique solution to an issue that has only become more pronounced as financial institutions make greater use of OTC derivatives.”

Steven O’Hanlon, president and CEO of Numerix, adds, “Transparency is a key factor in the growth of OTC markets. It is essential to have transparency in data, models, and their calibration to ensure confidence while trading these products. By combining Parameta’s extensive and diverse data with Numerix’s pricing models and analytics solutions, we can build greater trust in this segment of the capital markets.”