Chartis

FRTB Solutions 2017

April 2017 • Ref RR1712
Research Report
Number of pages: 35
Single user license: $7000
Number of figures and tables: 14 
Corporate license: $10000 

Overview

In the past decade, banks have made substantial investments in risk technology to meet evolving business and regulatory demands. That, however, was before the introduction of the Fundamental Review of the Trading Book (FRTB). The risk technology platforms that banks have implemented - many of which were considered state of the art at the time – now face distinct challenges in coping with the new business frameworks and models being ushered in by FRTB.

For banks, implementing FRTB will pose operational, methodological and technological challenges, which will have significant implications for their technology usage. Alongside closer integration of risk systems across the front and middle offices, banks will require substantially enhanced data management and computational power. Scalability and flexibility will be vital: desk-level analysis must be as accurate and efficient as possible to satisfy the regulators.

Open-source software – and in particular the Python ecosystem – offers banks plenty of scope in tackling their data management shortcomings, while more compute power can come from a variety of sources, including special-purpose processors and data grid upgrades. Tying it all together, and offering an ideal platform on which banks can build the next-generation risk systems they need, is the cloud.

For vendors, scaling their solutions will be a key issue – something they must consider as they develop their next-generation risk offerings. Data also looms large: data architecture, models and integration – along with risk aggregation – must be key elements of their solutions as FRTB becomes established.

This report, a companion piece to the Chartis report Sell-Side Risk Management Technology: Market Update 2017, looks specifically at the implications of FRTB for banks and risk technology vendors. It analyzes the main impacts of FRTB on banks, and the implications for their operations and technology. It also proposes solutions that banks can use to equip themselves to meet the new challenges they will face.

This report uses Chartis’s RiskTech Quadrant® to explain the structure of the market. The RiskTech Quadrant® uses a comprehensive methodology of in-depth independent research and a clear scoring system to explain which technology solutions meet an organization’s needs. The RiskTech Quadrant® does not simply describe one technology solution as the best risk management solution; it has a sophisticated ranking methodology to explain which solutions would be best for buyers, depending on their implementation strategies.

This report covers the leading vendors offering FRTB solutions: Asset Control, AxiomSL, BearingPoint, Bloomberg, Calypso, CompatibL, FINCAD, FIS, GoldenSource, IBM, IHS Markit, Imagine Software, Misys, MoCaX Intelligence, Murex, Numerical Technologies, Numerix, OpenLink, Oracle, Quantifi, Quaternion Risk Management, Razor Risk, RiskVal, SAS and Xenomorph.