Risk Management and Performance Measurement
TradeRisks has created an all encompassing debt and derivatives management system. The system enables us to instantly understand the financial risk exposures of our clients and advise them accordingly. It enables us to see our client’s exact position as we negotiate directly with their banking counterparties.
Pricing a derivative correctly to see if the rate offered is reasonable when compared with the mid-market rate is possible, but it an extremely complicated and time consuming exercise with a large margin for error. Without access to specialist knowledge combined with sophisticated pricing models and real time market information, it is near impossible to judge the reasonableness of any quote.
TradeRisks has an unparalleled derivative pricing capability and a proven track record with clients that have saved them tens of millions. We would recommend the pricing of all derivatives be discussed with an advisor with appropriate trading skills as soon as possible prior to entering into any agreement, whether it is an agreement of the pricing formula (e.g. to execute future trades at an agreed spread over the curve) or for an actual trade.
Derivatives Consulting and Modelling
TradeRisks provides advice and technical tools for derivatives pricing, trading, risk management and modelling. Our team has many years of experience of derivatives pricing and risk management in the fields of interest rates, credit, foreign exchange, and equity and commodity derivatives.
TradeRisks provides combined credit and interest rate risk management model design, implementation and back testing for financial institutions.
On the credit side, TradeRisks most recent work has been on the design and development of models that combine portfolios of loans to corporates for whom (equity or debt) securities are either not publicly quoted or are illiquid with portfolios of exposures to swap counterparties with liquid underlying securities.
Among the services we can provide are the following -
• Advising on pricing and modelling derivative products: what models are appropriate; what parameters should be used; comparing outputs of in-house or vendor systems with those given by our own models.
• Advising on risk management of derivatives: what risks should be hedged; how to cope with risks that cannot be hedged; how different model risks should be combined; how limits can be set.
• Reviewing existing systems and procedures for trading, pricing, modelling and risk management.
• Forensic analysis of what went wrong after unexpected underperformance, significant losses, rogue trader events etc.
• Education, training and information dissemination by written or verbal means.