XpressInstruments addresses well-recognised operational risks that currently exist with the growing use of these forms of derivatives. Due to the non-standardised structures of these products, which often have a relatively short life span, they typically have been managed on external spreadsheets or on a home-grown/in-house developed system. These lack transparency and require a considerable amount of manual input to manage lifecycle events and to view exposure within a broader portfolio.
With XpressInstruments, specialised products can be added to SimCorp Dimension in just a few days or weeks, instead of months or even years. New instruments can be added at any time, with the support of SimCorp. Once in the system the robust support processes for middle and back offices are inherent.
By using SimCorp Dimension with XpressInstruments, structured products and exotic instruments can be handled and managed in the system in the same way as standard exchange traded and OTC products. Because SimCorp Dimension provides enterprise-wide seamless processing, based on a core database, all investment instruments are handled in a consistent way throughout the system. As a result, SimCorp Dimension maintains complete coverage of all holdings as well as profit and loss calculations.
As part of SimCorp Dimension, XpressInstruments utilises the systemâs core database, eliminating the need to re-key data and to consolidate or reconcile information between disparate internal systems. Instrumentsâ events are handled automatically, including fixings, payments and exercise and choice decisions.
The specialised products and exotic instruments can readily be valued using multiple market tested pricing and valuation models already contained within SimCorp Dimension. When new pricing models are added to the system, they can immediately be utilised to price existing instruments.
âCurrently, there is tremendous growth in the use of structured products and exotic instruments, which are designed to meet specific investment objectives,â says Kjell Johan Nordgard, Senior Vice President of Market Support for SimCorp. âBy introducing the XpressInstruments module to SimCorp Dimension, we aim to remove high levels of operational risk and challenges that investors in these products have had to endure in the past.â