The deal, which is a strategic and valuable win for DerivaTech, provides DBS with a leading edge solution for constructing single and multi-leg structures in both vanilla and exotic flavors. "With the expansion in our business, both in volume and sophistication, our existing legacy system became less effective," explains Conrad Kwok, Head of FX Options at DBS. "DerivaTech fits into our expansion plan and we expect to play a more active role in the exotic option market."
While other Asian banks in the region are still reeling from the economic ravages of the recent past and face stiff competition from international players, DBS has successfully bucked the trend. Its Treasury and Markets Group is well on its way to becoming the regional leader. Over the past two years, trading volumes have doubled while revenues have shown a double-digit increase. DBS is now ranked among the top 10 Forex traders in the region and Risk magazine voted the Bank as the best domestic derivatives house in South Asia.
DBS’ objective to become the foremost risk advisory service provider is underpinned with an investment program that is in excess of USD100 million. Technology has been an essential part of the drive. Frank Wong, Senior Managing Director and Head of Treasury & Markets at DBS, said, "Managing market risk is the key to making the strategy work. In recognition of this, DBS has been investing for several years to develop risk management systems and skills and market discipline as the foundation for its growth in the region. "
"We believe we understand the risks in Asian markets better than anyone else. As a result, we are more comfortable managing those risks. But, this is not so much an instinctive process as it is a systematic one," says Wong.
"DerivaTech is a part of our solution to further manage risk," Wong continued, "For example, we’ve found that DerivaTech’s Monte Carlo pricing for exotics, which uses the full volatility surface, gives really close-to-the-market results. It’s pretty fast and intuitive to use, with no training or major implementation effort required. We were up and running in a matter of days. It’s clear that with tools like these and our unique knowledge of the local markets, we can offer our clients a real advantage."
"DBS’ choice of DerivaTech underlines the clear competitive edge offered by our solutions," said Daljit Saund, DerivaTech’s EMEA Sales Director. "As the only specialist software provider, focusing solely on currency options, our functionality and coverage in pricing, analytics and portfolio risk management is unrivalled. Our solutions are truly scalable, supporting the requirements of global top tier banks, as well as emerging market institutions."