Case study equity swaps management banking luxoft for a top10 global investment bank


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Case study equity swaps management banking luxoft for a top10 global investment bank

  1. 1. For more information about Luxoft, studyEquity Swaps Management ApplicationSummary13.09.2012Develop an application for portfolio management of equity swap and total returnswap (TRS) derivatives to support the bank’s prime brokerage services.uu Client: A top ten global investment bankuu Business Area: Prime Services, Front Officeuu Asset Classes: Equity Derivativesuu Technology Set: IBM WebSphere, Oracle, Java/J2EE: EJB, Spring,Hibernate, SOAP, .NET Framework: WinForms, WPF, Web Servicesuu Integration: Reuters and over 40 Bank applications, including trades,allocations, clients and rates data sourcesuu User Profile: Traders, Account managers (100+ users)uu Geography: UK, USuu Services Provided: Business analysis, Development, Maintenanceuu Team Size: 10+ team membersuu Duration: 5+ years development and maintenance
  2. 2. Business ChallengeLuxoft Delivered SolutionPrime brokerage services were part of the bank’s strategic developmentplan that required capabilities to manage swap contracts in the portfolio.The high-level business requirements included:uu Automate the workflow for trade booking, approval and block tradeallocations to support the new strategic business modeluu Automated daily maintenance for contract expiration, margins, interestcalculation and changes in valueuu Automated tracking of the client trading operationsuu Automated calculation of all cash flows associated with trading activities,such as the interest, notional fees, and dividends related to the contractsuu Integration into existing data flows and applicationsuu Data migration includes back-dated changes to the trades, prices, andfees, as well as recalculation of the positions and cash flowsuu Decommission the legacy platformThe bank’s IT department needed a vendor with a background in the equityderivatives domain and a proven record of accomplishment in systemdesign and development. Luxoft was selected as the vendor to extend thebank’s IT team, providing expertise in both the business and technologydomains.The biggest challenges were in designing a system and developinga rollout plan to aggregate dozens of data feeds and to migrate andrecalculate a large volume of existing data without affecting the day-to-daybusiness of the bank. The system integrated the data flows from dozens ofupstream applications that contained the source data for pricing, clients,trades and allocations information. More dozens of data flows had to beintegrated with the downstream applications used for risk management,reporting, confirmations, and reconciliations. These integrations requireda considerable number of recalculations on a large volume of data, riskingthe level of service requirements for system performance and availability.To mitigate these risks, Luxoft initiated performance improvements fordatabase optimization, memory usage reduction, and transaction and errorhandling.02Luxoft - Case Study
  3. 3. 03Luxoft - Case StudyThe equity swaps management application is the primary front-officecomponent for numerous applications that support different phases ofthe equity swaps lifecycle. The technical solution is a complex informationsystem with a multi-tiered, client-server architecture to support a highvolume of operational data while maintaining performance and stabilitylevel-of-service requirements. Luxoft successfully delivered this robusttechnical solution on time and within the budget.Figure 1:Equity SwapsManagementSystem ArchitectureORACLE 9.2(LINUX).NET CLIENTS(WINDOWS XP)REPORTS (NAS STORAGE)OUTCOMING DATA FLOWS.NET DELTACALCULATIONENGINE(WINDOWS SERVER)WEB SPHERECORE SERVER(LINUX)RETURES PRICESINTEREST & EXCHANGE RATESOTHER INCOMING DATA FLOWS
  4. 4. 04Luxoft - Case StudyBenefitsCustomer FeedbackLuxoft’s solution provided the bank’s prime brokerage services with thefollowing benefits:uu Increased opportunities for higher returns and lower costs in the bank’sprime brokerage serviceuu Supports the strategic business plan to improve the bank’s competitivepositionuu Improve management performance and operational coordinationthrough integration of the bank’s source data“And thanks once again for the tremendous effort you’ve put in over the lasttwo weeks and continue to put in. This neither goes unnoticed or forgotten.”- Bank IT Project Manager“Thanks for all your helpful and insightful input, as ever.”- Bank Business Analyst
  5. 5. About luxoftLuxoft, a principal subsidiary of IBS Group, is a provider of advancedapplication and software engineering outsourcing services for global andregional enterprises. Luxoft builds partnerships with its clients, such asBoeing, IBM, Deutsche Bank, UBS, Harman, Avaya, Alstom, and Sabre, basedon the culture of engineering excellence, innovation, and deep domainexpertise. Luxoft offers international delivery capability through its networkof state-of-the-art delivery centers in North America, Eastern Europe, andAsia. Luxoft`s customers benefit from the right mix of technology skills,industry knowledge, proprietary processes and methodologies, and achoice of engagement models.For more information about Luxoft,© 2012 Luxoft