Solution portfolio with added value for banks: Pre Trade
1. Customer Profiling e.g. MiFID
The Risk Profiler guarantees the structured recording of the investor profile and serves as a starting point for guaranteeing the suitability of the investment proposals made.
Both the knowledge and experience of the investor as well as their ability to manage risk and risk appetite are ascertained. The structure of the questions and the underlying scoring matrix can be adjusted to the individual markets and thus meet the requirements of the various rules (e.g. MiFID) within the framework of one application.
More information on risk profiling can be found here.
2. Investment Strategy and Asset Projection
The results of risk profiling lead directly and automatically to the corresponding investment strategy envisaged by the bank. The strategy is shown graphically in a risk/return diagram in the context of the other investment strategies available to make the customer aware of the various risks per strategy at this point. In order to increase transparency, associated strategic asset allocation or possible specimen portfolios are displayed for implementation.
Asset projection in the Monte Carlo method calculates the future trend of the proposed investment strategy. Regular and sporadic inflows and outflows of money are taken into consideration in the process. Cash flows from coupon payments or the due date for instruments are also included in the calculation.
More information on investment strategy and asset projection can be found here.
3. Investment Proposal
Once the correct investment structure has been selected with the customer, it is time for concrete translation into an investment proposal. The Asset Manager module applies the bank's specifications rigorously while doing this. It does not matter whether implementation is to take place on the basis of asset allocation, sample portfolios or Efficient Frontier. The asset manager is capable of showing any approach, thus ensuring that the central investment strategies are implemented 1:1.
When preparing the investment proposal, lists of recommendations and statutory restrictions are taken into account for granted. In addition, any customer wishes and constraints can be taken into account.
More information on the investment proposal can be found here.
4. Risk and Scenario Analysis
Value at Risk (VaR) module: real-time calculation of the Value at Risk over various periods and with various probabilities according to the variance-covariance method (parameterised delta-gamma method).
Scenario analyses: Application of predefined scenarios (e.g. 09/11) to the investment proposal or random stress tests including title, index, currencies and interest.
More information on Value at Risk, scenario & trade analyses and stress tests can be found here.
5. Portfolio Monitoring
Proactive consultancy: the event manager generates options for business transactions with a high probability of conclusion per customer. e. g. customer with high cash-equivalent item, deviation from original investment strategy, VaR higher than x%.
Investment controlling: the constraint monitor ensures that constraints once ascertained with the customer can be guaranteed over time and taken into account during rebalancing.
More information on portfolio monitoring and investment controlling can be found here.
