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How FintechIO is Revolutionising Trading Front-Office Option Pricing for FTSE 100 Commodities Companies

Time to read:

2–4 minutes

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Client Background

Our client, a leading financial institution, sought to revolutionize their trading operations by developing a comprehensive web trading portal. The goal was to empower their Front-Office Traders with advanced tools to price various options, utilizing multiple strips and pricers, including American, European, and Chinese (TADO) pricers. The client aimed to enhance user experience, streamline complex mathematical calculations, and ensure real-time pricing accuracy while maintaining robust performance and scalability.

Challenges

  1. Complex Mathematical Calculations: Implementing advanced mathematical models for option pricing, including Greeks calculations, volatility skew adjustments, and complex pay-off structures, required expertise in financial mathematics.
  2. Integration with Numerix SDK: Leveraging Numerix SDK for accurate pricing algorithms and risk analytics necessitated seamless integration into the web trading portal architecture.
  3. UI/UX Design: Designing an intuitive and user-friendly interface for traders to interact with complex financial instruments and pricing models posed a significant challenge.
  4. Real-Time Pricing: Ensuring real-time pricing updates from various market data sources while maintaining low latency and high accuracy was crucial for trading decisions.
  5. Performance and Scalability: The system needed to handle a high volume of concurrent users, complex calculations, and data processing efficiently, without compromising performance or scalability.

Solution

  1. Architecture Design: We adopted a microservices architecture to ensure modularity, scalability, and flexibility. Each component of the trading portal was designed as a separate service, allowing independent scaling and maintenance. The core pricing engine utilized Numerix SDK for accurate and efficient option pricing calculations.
  2. Complex Mathematical Calculations: Our team of quantitative analysts and software engineers collaborated closely to implement sophisticated mathematical models for pricing American, European, and Chinese options. Leveraging Numerix SDK, we ensured the accuracy and reliability of the pricing algorithms, enabling traders to make informed decisions.
  3. Integration with Numerix SDK: Seamless integration with Numerix SDK was achieved through thorough testing and customization. We utilized the SDK’s extensive capabilities for pricing derivatives and adapted them to the specific requirements of the web trading portal.
  4. UI/UX Design: Our design team focused on creating an intuitive and visually appealing interface that simplifies complex financial data. We conducted user research and feedback sessions to understand traders’ needs and preferences, resulting in a streamlined interface with intuitive navigation and interactive visualization tools.
  5. Real-Time Pricing: We implemented real-time data integration with multiple market sources to provide up-to-date pricing information. Traders could access real-time market data, including bid-ask spreads, volatility, and option chains, enabling them to react swiftly to market changes.
  6. Performance and Scalability: To ensure optimal performance and scalability, we employed cloud-native technologies and containerization. Auto-scaling mechanisms were implemented to dynamically allocate resources based on demand, ensuring uninterrupted service during peak trading hours.

Results

  1. Enhanced Trader Productivity: The intuitive UI/UX design and advanced mathematical models enabled traders to price complex options efficiently, resulting in improved productivity and decision-making.
  2. Real-Time Pricing Accuracy: The integration with Numerix SDK and real-time pricing engine ensured accurate and up-to-date pricing information, enabling traders to make informed decisions in volatile markets.
  3. Scalability and Performance: The cloud-native architecture and optimization techniques allowed the trading portal to handle a high volume of concurrent users and complex calculations while maintaining optimal performance and responsiveness.
  4. Positive User Feedback: Traders expressed satisfaction with the platform’s ease of use, real-time data updates, and powerful analytical tools, leading to increased adoption and engagement.

Conclusion

The development of the web trading portal enabled our client to stay ahead in a highly competitive financial market. By leveraging advanced technology, complex mathematical models, and exceptional design principles, we delivered a solution that meets the evolving needs of Front-Office Traders while ensuring performance, reliability, and scalability for future growth.

Hello.

We’re FintechIO. We are on a mission to transform the way the world interacts with money, making financial services smarter, faster, and more accessible for everyone. Headquartered in London, UK and Cluj-Napoca, Romania, we’ve embarked on a journey fuelled by innovation and driven by our commitment to customer satisfaction. Since we launched, FintechIO has partnered with some of the world’s best brands, including Credit Suisse, Citibank, AngloAmerican, and Inigo.

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