22/11/2004

Banks not ready for anticipated boom in credit derivatives, warns survey

Calypso Technology, a leading provider of cross-asset front to back trading solutions for the capital markets industry, revealed that many financial institutions fear internal IT systems will not be able to adequately cope with increased volumes in business.

According to the providers survey of global credit derivatives players, most financial organisations fear technical infrastructures will not support anticipated growth in their credit derivatives business over the next five years.

The study of100 risk managers, traders, operations and IT staff at financial institutions globally found defined improved product coverage and risk reporting as key areas in the need for improving credit derivatives infrastructure.

Among the findings, 58% of organisations are in the process of upgrading their infrastructure , only 10.8% had no definite plans to upgrade their technology. Nine-tenths of respondents placed importance on real-time risk analysis in a credit derivatives infrastructure. However,only 21.9% of organisations were able to track all trades either on demand or immediately.

"This survey highlights the importance of a holistic approach to credit derivatives systems. For any significant player in the market, the requirements of the technical infrastructure across all dimensions are considerable," said Mas Nakachi, Senior Analyst at Calypso Technology.