(Expansion) – Risk managers facing a market plagued by uncertainty need a technology framework that gives them more security and can quickly adapt to ever-changing needs, with 24/7 operations.
In recent months, global markets, from stocks and bonds to commodities and cryptocurrencies, have shown extreme swings not seen in the past decade. Rapid changes in asset prices have presented new opportunities, however, the likelihood of an upcoming recession has led financial services companies to be cautious in their outlook and to tighten their operations.
Risk technology teams find themselves somewhere between cutting costs and enabling their trading desks to seize every opportunity.
Application Programming Interfaces (APIs) emerge as an ideal option that ticks all the boxes. These offer risk analytics with lower latency, lower costs, and higher performance by enabling deeper integration between applications and a smoother end-user experience, compared to systems that rely on file-based data delivery. massive or different user interfaces.
Different people, different approaches
Traders and risk managers often have their own way of looking at risk. While good fortune may allow them to find a system that meets all their needs when it comes to implementation, as trading operations expand, companies may find themselves faced with the need to maintain multiple perspectives with custom risk analysis selections.
Constantly having to rely on technology vendors to update these analytics and interfaces can be time consuming and inefficient.
With a model in which the risk technology team maintains the front-end user interfaces and workflows powered by APIs from their risk and data providers, companies have a flexible way to offer each user the most relevant risk analysis and data.
Buy or create?
One of the biggest concerns for companies facing increasingly complex risk needs is buying or creating. They have to decide whether to invest in an internal risk system built from scratch that meets their exact needs, or adopt a system from a vendor that may have most, but not all, of the analytics, interfaces, and workflows.
APIs are a great way to find a middle ground, customizing interfaces and analytics to feel like a more organic part of the risk and trading environment, while outsourcing the technical burden of maintaining services under the hood – like data centers, pricing models and compute servers – to providers specializing in them.
APIs are also a necessity for trading desks to grow into macro and quantitative trading strategies that are based on processing a wide spectrum of data and analysis into trading signals. Companies developing machine learning (ML)-based models for algorithmic trading, especially those using big data and complex statistical models, are increasingly turning to cloud-based services for their computing needs.
APIs aren’t new, but the ever-increasing volume of data and analytics facing risk managers has them looking for tools that can process it more efficiently. They are looking for tools that turn that data into actionable, timely, and relevant signals, which has sparked a lot of interest in APIs, especially from banks and large asset managers.
Increased interest in these services has spread to both buy-side and sell-side companies, and it’s important to work with a trusted technology partner that can ensure access to industry-leading market data and analytics. and provide scalability for risk management and trading demands.
With the right framework and technology provider, companies will always be well positioned to deal with the constant uncertainty of financial markets.
Editor’s note: Dharrini Bala Gadiyaram is the Global Head of Enterprise Risk products at Bloomberg. Follow her on . The opinions published in this column belong exclusively to the author.
