Hi all,
Welcome to this new Monthly Focus edition about LexiFi Apropos use cases for asset managers.
Structured investment instruments play an essential role in the asset management industry. They allow meeting specific management objectives and covering asset classes usually reserved for specialists. But using such instruments makes it essential for asset managers to access tools allowing them to fully master the pricing and management of structured investment products.
Building such tools in-house is costly and time-consuming. The challenge is finding a software solution allowing for the required flexibility to manage tailored products while providing the desired level of operational automation.
That is where LexiFi comes into play: asset managers integrate LexiFi Apropos solution within their environment to seamlessly book, design, and price structured instruments with access to advanced quantitative risk analytics and lifecycle management tools.
Our clients combine internal systems’ strengths with LexiFi Apropos’ structured investment expertise, creating a custom centralized quantitative and management utility.
"LexiFi enables us to price 99% of our products from complex to vanilla. It was definitely the best choice that we made!"
Abdoul Aziz Diallo, Head of Structuring at Solutions Natixis Investment Managers International
In the following sections, we list the main LexiFi Apropos features used by asset managers. However, it is important to note that the software allows for endless types of company-specific workflow creation.
1. Seize every market opportunity and offer competitive structured investments
Asset managers prototype, define and price structured investment products in LexiFi Apropos, regardless of their level of complexity with easy access to functions and data:
- Market data: the software comes with embedded connectors to data providers, and standard documented file formats allowing an easy import of inhouse specific data
- Product ideas: users can test product ideas by using the generic payoff creation tools, the software's scripting capabilities, as well as the set of available functionalities and pricing models. Some of our clients automate the production of creative reports such as the League of Underlyings report giving the 10 best underlyings for specific payoffs
- Product testing: scenario testing, portfolio optimization, and sensitivity analyses are easily accessible through user-friendly interfaces, graphical results, and “extra results” to dig deeper!
2. Run, deconstruct, and investigate valuations
Whether it is for internal reporting, regulatory requirements, or counterparty price negotiation, LexiFi Apropos has been used in the structured investment business to price all sorts of structured investments for over 20 years.
Among available features and benefits:
- Auto or custom pricing and calibration: pricing can be done in one click, thanks to the automated selection of the pricing model, parameters, market data, and calibration. Users can alternatively choose a specific model, input their own yield curve, and pre-calibrate the model with their preferences and assumptions.
- The extra mile: graphs and extra results are automatically derived from pricing and include information such as cash flow details, probabilities of barrier crossings, early redemptions, etc.
- Transparent pricing: another benefit is the full audibility of pricing results with detailed pricing models and calibration documentation
- Quantifying pricing uncertainty: LexiFi Apropos offers a cutting-edge tool providing a confidence interval for a given price, as well as the sources of pricing uncertainty, for comparison purposes or model risk management matters
- Price investigation tools: users may investigate counterparty quotes using tools such as:
- The Monte Carlo Inspector and the PDE Inspector features allow for a drill-down discovery of the prices calculated in LexiFi Apropos
- The Static Decomposition Inspector tool can be used to decompose complex products into subcontracts to better understand pricing results
3. Fear no regulation and tame any risk
"It was a great relief for us to have LexiFi at our side in order to address the challenges of new regulations such as EMIR. Only good surprises come out of this system"
Olivier Benhamou, Former Head of the Pricing Department at DPMS Natixis Asset Management
Our clients use LexiFi Apropos to comply with various regulations such as EMIR, SIMM, MMF, AIFM, SCR, etc., but also for internal risk reporting. User notably access:
- Regulatory ratios computation: the tool allows for calculating regulatory ratios for Solvency Capital Requirements
- Reporting automation: users automate the reporting of metrics such as the VaR and the Expected Shortfall which are required by the AMF on a daily basis
- Risk metrics calculation: liquidity risk indicators, fund exposition metrics, and fund ratio thresholds are also computation examples
"LexiFi Apropos allowed us to reduce manual tasks on risk report production by 80%, the more we use the solution, the better we become at identifying automation opportunities."
Erwan Collec, Risk Specialist at Federal Finance Gestion
4. Forget about FOMO (the fear of missing out)
One of the biggest benefits of using LexiFi Apropos is having a centralized tool to manage structured investments and report both internally and externally to clients and stakeholders. Asset managers have an interactive dashboard to perform all types of monitoring and reporting activities including:
- Automated lifecycle alerts and notifications: anticipate and manage product events
- Tailored reporting: access interactive reporting tools and create custom reports on topics such as diversification in terms of sectors and geographic regions, stress testing, etc.
- Automated document generation: automate the production of marketing and regulatory documents
5. A matter of customization
Various other use cases can be mentioned about LexiFi Apropos in asset management. The tool offers unprecedented flexibility thanks to our scripting language and ease of connectivity to other systems through APIs.
- Federal Finance Client Story is a reference for transformative automation and advanced customization
- Natixis Investment Managers International Client Story shows the successful digital milestones of the bank
LexiFi also provides technology services to software providers and platforms specializing in Asset Management:
- SimCorp: Xpressinstruments, a SimCorp Dimension module based on LexiFi's technology
- Fact: has integrated LexiFi’s contract description and the quantitative libraries into its asset management and valuation system.
- Asset Studio: Natixis Investment Managers International has launched Asset Studio, a platform developed in partnership with LexiFi and other fintech companies. This platform provides investors with access to multiple features such as portfolio construction, optimization, and analysis tools.
LIST OF RELEVANT FEATURES
- Pricing and Quantitative Analytics
- CVA-DVA
- Solver
- Greeks
- Pricing
- Pricing uncertainty
- Risk scenarios
- VaR
- Pricing methods
- Pricing models
- Backtest
- Compliance and Regulatory Requirements
- Reporting tools
- Document Generation
- Lifecycle management
- Workflows
- Connectivity