Expanding its risk management business, SunGard Data Systems has agreed to buy a position-keeping and risk management system for commodity markets from IntercontinentalExchange (ICE). Terms were not disclosed for the deal, which is being announced today.
SunGard, with the acquisition of ICE Risk, will add real-time exchange connectivity, valuation and risk capabilities for futures and options to the end-of-day and intraday metrics it offers through Kiodex Risk Workbench, a software-as-a-service (SaaS) product. The ICE system will be rebranded as Kiodex Real Time.
The platform, which SunGard acquired in its 2004 purchase of Kiodex, integrates trade capture, valuation, risk management, financial reporting and market data for commodity trading. “Kiodex receives trades from prime brokers or direct-market access tools, whereas ICE Risk relies on direct connectivity to exchanges,” explained Ben Jackson, COO of the Kiodex unit. “We have historically been able to handle both exchange and OTC products, but our strength was in the over-the-counter market.”
The combined offerings will let traders link to ICE, the Chicago Mercantile Exchange, NYSE Euronext’s Liffe, the London Metal Exchange, BM&F Bovespa, Tokyo Commodity Exchange and Australian Stock Exchange. Connections to other venues are in the planning stages.
Kiodex’s SaaS approach allows customers to simplify implementation, gain processing efficiencies and reduce IT support. The platform has 150 clients divided evenly among hedge funds, banks, futures commission merchants (FCMs) and large corporations. Though Jackson would not say how many ICE Risk customers Kiodex will inherit, he did note that there is substantial overlap.
ICE Risk had been on the block “for over a month,” according to Jackson, and the Wayne, Pa.-based technology giant won a competitive bidding process. “The acquisition of ICE Risk will allow Kiodex to expand its client base beyond risk managers and back-office operations executives to traders who require real-time analytics,” said Jackson. Kiodex Real Time and Kiodex Risk Workbench will be available separately or as an integrated package, he added.
ICE Risk will give Kiodex’s prime brokerage and FCM customers access to “a real-time risk dashboard and customer profit-and-loss information,” added Jackson. “Banks will have access to a real-time counterparty risk dashboard, and corporations will be able to receive real-time alerts on hedge book valuation changes.”
On its Web site, the Atlanta-based exchange operator says that ICE Risk offers real-time deal updates and auto aggregation on the ICE trading platform and other venues, as well as the ability to segregate portfolios into sub-accounts to track risk, create live reports and import internal or external marks for valuation. ICE officials were unavailable for comment.
Commodity traders need to view and value executed trades rapidly to achieve greater control over risk and exposures. With real-time positions and prices for exchange-traded and -cleared instruments, users can view any level of a deal’s underlying structure to the lowest level of exposure.
This article is also posted on SecuritiesIndustry.com.
Chris Kentouris is senior international editor at Securities Technology Monitor. Chris can be reached at by email.
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