More than 20 investment banks and asset managers are considering using a real time data analytics platform for the $2.1tn interest rate swap market that could reduce trading “fat finger” and other trading losses and boost revenues in their Fixed Income, Currencies and Commodities businesses.
Mosaic Data, a London-based fintech that counts JPMorgan as a minority shareholder, said it had already signed up one large bank to its new MSX real time interest rate swap analytics platform and it was in talks with “more than 20 sellside and buyside firms” about launching the technology. It expects more than eight clients to sign by the end of 2019.
Banks are eager for improvements to their FICC performance since the business has been in a structural decline so severe that FICC revenues among the world’s 12 biggest investment banks fell 37 per cent from 2010 to 2017, according to data from industry monitor Coalition.
Matthew Hodgson, chief executive and founder of Mosaic Data, said his company’s real time analytics allowed institutions to make better decisions in a complex and fast-moving market, which in turn could help them win business, optimise client activity and avoid losses. Banks have traditionally relied on historic analytics for interest rate swaps because of the complexity of the market place.
“MSX Swaps allows sales and trading teams to answer questions in real time such as ‘who are my most profitable clients?’ ‘which ones aren’t trading with me as much as I would like them to?’ and ‘how can I win back their business?’ said Mr Hodgson. “Answering these fundamental questions allow you to understand where you might want to increase your engagement with these clients because you might be missing valuable opportunities.”
Mr Hodgson said risk management was a key part of the attraction of real time analytics for banks. “Traders can make faster, better-informed hedging decisions to more effectively and efficiently manage risk.”
“MSX Swaps can also identify and flag up particularly unusual trades and alert the bank in real time. That means the bank can instantly spot ‘fat finger’ trades and other kinds of human error which could be exceptionally costly.”
Mosaic launched a real time analytics platform for bonds last October and has signed up two customers. Mr Hodgson said the company was “actively developing analytics for a number of other asset classes in the FICC markets””
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