The principle behind derivatives may be simple, but the paperwork and accounting is ferociously complicated and time consuming in a world where a little time is a lot of money. It's no wonder, then, that dealers favor systems to handle everything from pricing to billing.
Canada's Bank of Montreal (BOM) recently installed an integrated front- to back-office derivatives system, developed in conjunction with Mountain View, CA-based Infinity Financial Technology, Inc., for its growing derivatives operations in interest rate and commodity products, plus foreign exchange options. The bank also does credit derivatives for its own account. "We've really stepped it up in the past 18 months," says David Hyma, BOM's svp, global financial products and money markets.