SimCorp Dimension Release 4.5: sophisticated technology meets market challenges

SimCorp helps clients mitigate enterprise risk in a response to market turmoil.

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The increasingly complex investment management environment as well as the current financial crisis both underline that improved risk management is crucial for financial institutions to stay competitive in ever-changing markets. Releasing the new version of the investment management software solution SimCorp Dimension, SimCorp responds to this challenge across the front, middle and back office.

Within the front office, all signs point to an increasingly transparent and restrictive market environment that will require a more sophisticated use of technology. Reduced equity returns have obliged investment management firms to better manage costs and operational risk with the implementation of electronic trading. As electronic trading continues its explosive growth rate and displaces outmoded trading models, the need for cutting-edge technology has never been greater.

To cater for this, SimCorp offers a seamlessly integrated, feature-rich front office suite that covers portfolio management, trading and compliance. Sophisticated technology allows trading executives to optimise the trading function with electronic trading via the FIX1 protocol. SimCorp Dimension provides accurate real-time positions and instrument valuation to better manage risk and improve portfolio returns. Moreover, SimCorp is continuously improving the front office suite, and Release 4.5 is another important step towards refining the offering with the cutting-edge technologies, tools and functionality that will enable clients to improve the entire front office investment process workflow.

IMPROVED RISK MONITORING AND PERFORMANCE MEASUREMENT

The investment process has become increasingly complex, incorporating investment strategies (alpha/beta) and exotic instruments (derivatives and structured products). Accordingly, financial institutions need to put more emphasis on risk monitoring and investment performance measurement. Also, the current financial crisis has further stressed the importance of the transparency of risk positions and risk-adjusted performance, especially for structured products. SimCorp recognises these challenges in its continued effort to improve risk management and performance measurement functionality across the middle office.

As an example, SimCorp Dimension extends its risk monitoring capability by introducing multi-factor models powered by Advanced Portfolio Technologies (APT™(2)). Plugged into the SimCorp Dimension risk flow, this solution allows a broader range of clients to reduce operational risk, using SimCorp Dimension as their central operating and intelligent data warehouse platform. Also, new performance measurement functionality has been introduced to ease and reduce the risk of transferring historical client performance data to SimCorp Dimension from third-party software. As a result, historical client portfolio returns can now be automatically included in the account reporting for improved investment performance overview.

AUTOMATED BACK OFFICE PROCESSES

To remain profitable in a market characterised by pressured margins, financial institutions with global operations are facing increasing demands, such as meeting new regulations, increasing operational efficiency and reducing the extensive risk and costs that can be associated with back office processes.

SimCorp Dimension covers all the operational processes that naturally go with maintaining holdings, and version 4.5 releases new functionality especially targeted at catering for the increased back office operations requirements. For instance, to ensure investment strategy execution based on correct data, top level reconciliations functionality is now offered. Moreover, to assist the fund industry, the new scalable Fund STP Server cuts operational risk and costs by eliminating labour intensive and manual controls and processes. Furthermore, calculation of theoretical prices and key ratios for credit derivatives are now available, based on market-tested, proven models and functions from FINCADTM(3).

STAY COMPETITIVE: MITIGATE ENTERPRISE RISK ACROSS THE FRONT, MIDDLE AND BACK OFFICE

Acknowledging the need for sophisticated technology to meet industry challenges, SimCorp will continue its bi-annual releases of new versions of SimCorp Dimension as a tailor-made tool kit to help clients mitigate enterprise risk across the front, middle and back office. Read more in the Release 4.5 presentation which can be ordered at http://www.simcorp.com/release45, where you are also offered an online guided tour of the release.