KONDOR+ INTERNATIONAL PLATFORM, LOCAL SOLUTIONS

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1 KONDOR+ INTERNATIONAL PLATFORM, LOCAL SOLUTIONS

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3 THE BEST OF BOTH WORLDS Kondor+ is the world s most widely used trade and risk management solution serving more than 450 institutions in 66 countries, including some of the biggest names in finance. Misys has expert teams dedicated to ensuring that Kondor+ provides customers with the tools they need to operate in today s markets, wherever these are. Kondor+ has long served the established markets with in-depth support for structured products and classic Treasury instruments. It has gained increasing prominence in the emerging markets too offering cross-asset, front to back support on a plug and play basis and, crucially, delivering the ability to meet local market practices and regulatory requirements. Emerging markets often have different infrastructures; operate in slightly different ways and use specific local conventions for trading and settlement. So if banking systems are to be effective, they must be flexible enough to accommodate local complexities. Kondor+ now incorporates all of the functionality needed to cover local market conventions in Brazil, Chile, Colombia, Mexico, Russia, Thailand, Vietnam and Australia, as well as providing full support for Islamic Banking. These regional-specific features are aligned with the core Kondor+ goals of: Providing a comprehensive cross-asset solution; Enabling financial institutions to manage risk according to international practices; and Allowing them to manage trade-processing by exception, efficiently and taking into account any regional idiosyncracy. This functionality is supported at a local level by a high performance team, drawn from the region, whose members combine solution expertise with a deep understanding of the goals of the local financial services business. Misys teams on the ground help customers to unlock the full potential of Kondor+ and apply it to their own specific business challenges. In short, the in-built capability of Kondor+, backed by local specialism and know-how offers financial institutions in the emerging markets the best of both worlds. Kondor+ is now used by more than 120 customers in Asia, 25 in the Americas, 40 in the Middle East and Africa and 275 in Europe and Russia. Brochure 2

4 LATIN AMERICA THE ONLY WAY IS UP! The requirements of financial institutions operating in Latin American countries have received considerable attention in the latest version of Kondor+; and it s not hard to see why....latin American capital markets have certainly come a long way over the past 20 years. Banking systems have strengthened, domestic bond markets have deepened, stock markets have expanded, local pension funds have grown, and alternative markets from derivatives and exchange traded funds to private equity have multiplied. BM&FBovespa, the Brazilian securities exchange, is now the thirdlargest exchange in the world. FT.com: Resilience at the core of a continent s growth story, Nov 13, 2012 Improved regulation and supervision, combined with significant developments in the underlying market infrastructures for trading, payments, custody, clearing and settlement now characterize much of this region, although its economic and financial history has also resulted in a number of idiosyncratic market and regulatory conventions. Recognizing this, Kondor+ now includes a host of features, to meet local requirements in the Latin American markets and to ensure compliance with country-specific regulations. Cross-asset modelling and pricing While pricing libraries are international, financial instrument modeling represents the main challenge in this region. The FX market is standardized, but the underlying rates and spreads hide a variety of quotation modes adopted by government rules, mostly differing from the international markets. In Brazil, this means handling the Brazilian CDI rate and LFT (Treasury financial bills issued by the Brazilian National Treasury); in Chile, TNA; in Mexico, TIIE (Tasa de Interés Interbancaria de Equilibrio - the 28-day interbank equilibrium interest rate) and in Colombia, IBR (el Indicador Bancario de Referencia) and CDT (Certificados de Depósito a Término). Kondor+ supports multiple spreads, different bases, Sobretasa (spread) rate calculations, product margins and implied margins. In terms of quotations, examples of the new functionality provided in Kondor+ include recognition of a 252 business day, an exponential daily compound, 28 day terms and use of dirty prices. Risk management During various crises, Latin American Governments introduced budgetary controls to rein in debt and deficit levels, as well as to act as a hedge against hyperinflation. Where non-convertible currencies were used for contracts and services, they brought in a policy of indexation adjustments. Hence, the dollar index URV in Brazil, UDI in Mexico, UF in Chile and UVF in Colombia, all became underlying instruments, which could be adjusted to take account of inflation and which are traded today in the form of a variety of instrument types - deposits, bonds, IRS and non-deliverable forwards (NDFs). Kondor+ now supports: Non-convertible rates, such as UDR, UDI and UF, Brazilian synthetic swaps (Cupon Cambial and Termo swaps) using the PTAX index, and funding. Inflation-linked indexes: Brazilian consumer prices indexes (the IPCA and IPGM) for principal reset; Mexican cross-currency UDI; Colombian UVR nominal reset for swaps; and Chilean UF/CLP inflation insurance or UF bonds. Region-specific curves: Brazilian DI/DDI, on a dirty or clean basis; Mexican TIIE, 28 day forwards; and in Colombia, the regulatory Nelson Siegel method. 3 Brochure

5 Exceptions pricing for increased efficiency Financial institutions operating in the Latin American countries can make their trading operations much more efficient if their systems allow them to price effectively for exceptions (facilities such as conditional pricing, daily P&L, sensitivities and cash flow management). Workflow can also be enhanced, if the system enables automatic margin sales (such as for FWD and swaps compensados in Chile), and supports the use of multiple collateral ( for the multiple collateral repo in Mexico, for example). Kondor+ includes this capability, so helping to increase the efficiency of the sales and Trading Desk. Brazil specific new functionality Management of PTAX (Brazil s reference exchange rate) requirements for: DDI and SSC spread futures Clean and dirty PTAX yield curves Global BRL-bonds and PTAX deposits Swaps and options Processing of DI rate derivatives and CDI swaps: DI futures and options: discounted overnight futures with underlying DI rate, expressed as an effective rate per annum, based on 252 business days Rounding/truncation done per yield/price Cost of carry yield quote method allows for P&L to match official variation margin Processing of Brazilian debt securities: LTN (Treasury bonds) NTN-F (National Treasury Notes, Series F), including Brazilian rounding rules LFT (Treasury financial bills issued by Brazilian National Treasury), including the ability to store premium/discount method and to handle Brazilian rounding rules Processing of BRL inflation-linked debt securities: NTN-C and NTN-B (National Treasury Notes, Series B and C - inflation-linked bonds issued by the Brazilian National Treasury), including Brazilian rounding rules Mexico specific new functionality Interest rate futures are used in Mexico to trade the TIIE (Tasa de Interés Interbancaria de Equilibrio - the 28-day interbank equilibrium interest rate). Kondor+ now incorporates all the functionality required to support: 28-day TIIE rates, swaps, caps & floors and swaptions 28-day TIIE yield and volatility curves Chile specific new functionality TERA Bonds represent the majority of the domestic bonds issued by the Central Bank of Chile. They are defined such that the quotation takes into account the yield and the price is calculated based on: TIR (Tasa Interna de Rentabilidad), the IRR market yield; and TERA, the yield of the bond at the moment of the issue These new formulas have an impact on: Bond deals Bond derivatives (future, repo and security lending deals) Collateral using these bonds Typical government bond issues using these conventions include: PRC-s, BCU-s, BCP-s, BTP-s, BCD-s, BTU-s, and BR-s. Kondor+ enables all of these securities to be fully managed. The price, yield and TERA (issue yield) are displayed in the reports and revaluation of TERA bonds. Colombia specific new functionality The Colombian derivatives markets have become increasingly sophisticated over the last few years, with the most common type of OTC transaction being COP/USD forwards, although the swaps market has also grown considerably. Kondor+ now includes specific functionality to accommodate Colombian conventions. These include: Nelson and Siegel Yield Curves Columbian debt securities: A new margin formula, new forward rate and new interest methods are available to handle local TES B, TES UVR, TES IPC and Global TES Bonds COP swaps and COP/USD and UVR/USD swaps: Simple nominal anticipated is now available for Colombian swaps Brochure 4

6 KONDOR+ NEW FUNCTIONALITY FOR OTHER EMERGING MARKETS Additions to Kondor+ are not restricted to Latin America, with a significant number of the latest enhancements reflecting the local requirements of other developing markets. Asia Pacific Region Kondor+ is well-represented in Asia, with 120 customers throughout the region. And this is why investment continues to be made in the solution to ensure that the local conventions of the newer markets are reflected in the latest version. For Thailand, for example, with Thai conventions for call accounts now included in Kondor+, specifically: Internal accrued rounding for periodic call accounts Flexible interest deals on call accounts For Vietnam, with support for: Physical gold deliveries Stock management, and Precious/FX reporting For Australia, with Kondor+ accommodating Australian CPI (Consumer Price Index) market conventions for: Zero coupon inflation-indexed swaps (ZCIIS) CPI curves Inflation Index Swaps (IIS) Capped/Floored IIS Russia And changing continents, in Russia, to follow the standards laid down by the Russian Federation s banking legislation, a new day count convention - ACT/ACT (RUS) has been added to Kondor+. Kondor+ Local solutions, international platform Now available with even more functionality to support the specific trading and regulatory must haves in the emerging markets, Kondor+ helps banks to compete across all asset classes, improve risk management, increase efficiency and reduce costs, all from a single modern, global platform tailored to local needs. 5 Brochure

7 Islamic Banking The requirements of this increasingly important sector have not been ignored in the latest version of Kondor+. As the size of the Islamic Finance market continues to grow, so do the needs of the Islamic Banking community. Add-on systems can no longer provide the breadth and depth of functionality required. Practitioners of Islamic Finance require a modern software solution which is capable of supporting a complete set of Shariah-compliant products and accurately managing risk. For some time now Kondor+ has delivered a real-time trade and risk management solution for Islamic Banking, providing full front to-back and cross-asset coverage for Islamic banks as well as conventional banks operating through separate Islamic windows. Investment continues to be made, with support for Murabaha, Commodity Murabaha, Mudharaba, Sukuk, Wakala and Profit Rate Swaps now incorporated in the latest version. Brochure 6

8 MISYS RECENT MARKET RECOGNITION NUMBER ONE TECHNOLOGY PROVIDER RISK TECHNOLOGY RANKINGS 2012 Number One Overall All Categories Number One Overall Trading Systems Number One Trading Systems Equities Number One Trading Systems Rates Number One Trading Systems Forex Number One Trading Systems Inflation Number One Pricing and Analytics Equities Number One Regulatory and Compliance Reporting STRUCTURED PRODUCTS TECHNOLOGY RANKINGS 2012 Number One Trading System Credit Number One Trading System Cross Asset Number One Trading System Foreign Exchange Number One Trading System Rates Number One Risk Management Collateral Management BEST TRADING PLATFORM BACK OFFICE ASIAN BANKER TECHNOLOGY AWARDS NUMBER ONE RISK MANAGEMENT TECHNOLOGY PROVIDER ASIA RISK TECHNOLOGY RANKINGS 2012 Number One All Categories Number One Derivatives pricing and risk analytics Number One Operational risk management Number One Derivatives pricing and risk analytics Equities Number One Derivatives pricing and risk analytics Interest Rates Number One Derivatives pricing and risk analytics Hybrids LEADING SINGLE TECHNOLOGY PLATFORM PORTFOLIO, TRADING AND RISK MANAGEMENT HEDGE FUND JOURNAL AWARDS 2011 STRUCTURED PRODUCTS TECHNOLOGY RANKINGS 2011 Number One Trading System Equities Number One Trading System Interest rates Number One Pricing and Analytics Equities BEST RISK MANAGEMENT INITIATIVE ASIA ASSET MANAGEMENT AWARDS ABOUT MISYS Misys is at the forefront of the financial software industry, providing the broadest portfolio of banking, treasury, trading and risk solutions available on the market. With 1,800 customers in 120 countries our team of domain experts and partners have an unparalleled ability to address industry requirements at both a global and local level. Misys was formed by the merger of Misys with Turaz, which includes the award-winning Kondor+ product line. Combined they are able to address all customer requirements across both the banking and trading book businesses. Misys is the trusted partner that financial services organisations turn to for help solving their most complex problems. Misys and the Misys globe mark are trade marks of the Misys group companies. Copyright 2012 Misys. All rights reserved. Find out more at / 1212