We hope that you and your family are well! October’s Monthly Focus is about product booking.
The attractiveness of structured products comes from their diversity and the infinite possibilities they offer to investors.
But let’s face it, in each region and market segment, investors seem to have a comfort zone. We can name Autocalls in Europe and Accumulators/Deccumulators in Asia.
Many financial institutions and derivatives/structured products software vendors have developed their platform following this behavioral bias. So, they end up with a solution that only allows booking commonly traded products.
As a result, when they want to trade a less “standard” product, they either have to wait for a development, or book a dummy structure, which by definition falls outside of their standard workflow.
This reminds us of the well-known 80/20 Pareto principle (80% in and 20% out!). It is, of course, an obstacle to the development of both financial institutions and structured product software vendors.
This “product coverage bias” dramatically increases the cost and risk of doing business in a new market segment or geographical zone: such strategic decisions would require to support new types of products leading to a massive IT effort.
"…The system [LexiFi] has the virtue of a total flexibility and allows to define complex contracts in a quite easy, intuitive way."
Marc Philippe, Head of Middle Office, Control and Monitoring, Banque et Caisse d’Epargne de l’Etat Luxembourg, October 22, 2013.
With LexiFi technology, you find easy ways to book commonly traded products automatically or manually with pre-defined templates. For instance, our PDF Importer tool allows you to drag and drop term sheets to book your products instantaneously.
For tailored and complex products, LexiFi Apropos equips you with many code-free alternatives to comfortably book the most complex products on any underlying or combination of underlyings for all asset classes.
Extreme cases could require using the scripting language. However, it is becoming increasingly rare to find a LexiFi user who needs scripting these days!
LexiFi consulting team is available to help in case you could not or - simply do not have the time- to book your products.
Many of you know that LexiFi technology generates a formal definition for all payoffs booked in the tool. What this means for you is: a quick and smooth access to lifecycle management, risk management, independent valuation, precise document generation and timely reporting for ALL PRODUCTS: no matter the asset class, product type or issuer.
After a couple decades spent across different financial entities worldwide, LexiFi technology has grown wiser and smarter. Fintech companies have been using LexiFi’s financial modeling capabilities to better serve their clients. While banks, asset managers, and brokers have been able to book, manage and price all their products, from complex to vanilla.