Understanding future risk is vital for every successful organisation. In the financial markets, gaining that understanding means processing a mountain of complex data. In previous generations that meant you needed big computers and proprietary software that only big banks could afford. Thanks to better open source software and commodity hardware, that is no longer the case.
Derivitec uses powerful modern infrastructure like MongoDB and AWS to make it possible for traders to get streamlined, industry standard financial analytics in minutes, not months. This gives them an understanding of what a range of different future events could mean for their investments. Answering the vital questions: What could go wrong? What’s the worst-case scenario? How can I hedge that risk?
To address these questions Derivitec needed to build a different, more modern, platform. In 2011, when the company started, the team knew it would be processing a large volume and wide variety of data. So the database layer was going to be a defining factor for success. For the core functionality of the platform something fast, reliable and, above all, flexible was needed. New data sources, constantly changing regulations, and variable customer requirements meant functionality would be continually evolving.
For Derivitec the obvious answer was a non-relational database with a document-oriented data model. Then, as now, MongoDB was a good fit. It’s worth pointing out that other no-SQL solutions were evaluated for this functionality but, quite simply, the performance levels were nowhere near what was needed.
There are dozens of non-relational databases, but the choice was still a simple one. The three reasons for deciding on MongoDB were:
- Tried and tested technology – it has all the modern functionality and performance but it’s also got a massive community, thousands of customers and a mature support network.
- Operational tooling – Cloud Manager provides monitoring, backup and automation of deployments from the beginning - reducing costs and eliminating risk
- Ease of use – If you’re building a platform that will be easy to use, it makes sense to use one that’s easy to use too.
MongoDB was also proven to run efficiently in the cloud, which is a huge part of what makes Derivitec special. In the early days Derivitec used Microsoft’s Azure cloud, but as its usage of MongoDB increased, the decision was made to switch from Azure to Amazon Web Services. Azure’s cloud was still too focused on its own software and it wasn’t as simple as it should have been to use non-Microsoft software, whilst AWS proved to be more accommodating.
With that underlying infrastructure in place the platform could now be scaled out. MongoDB’s flexibility enabled Derivitec to deliver a system that could have users calculating risk on their portfolios in minutes, compared to the months it would have normally taken. For example, you can simply drop your trades in from Excel, visualise them, rearrange your portfolios, set up new portfolios, and manage the whole booking cycle natively within the app.
The playing field is far from level. A big financial institution can still call a Napoleon's army of resources - both personnel and technology. But with the right data, enough context and access to intuitive tools you might just be able to see what your multiple futures hold. It’s exciting to be working in a time that modern open source software architectures and the power of cloud computing is eliminating obstacles and liberating giant ideas from giant budgets.
Derivitec Ltd is a privately owned, UK based independent software vendor specialising in high performance, cost effective analytics for the derivatives industry. Founded in Dec 2011, the company have been working intensively towards cloud based solutions for risk and portfolio management.
The Derivitec Risk Portal has been designed to allow users to start analysing risk on their derivatives portfolios in a matter of minutes. With industrial standard models and sanitised market data as standard, customers can focus on the business of business, while Derivitec concentrates on the business of risk.
For an overview of MongoDB and its implementation on the AWS cloud platform read our guide.
About the Author - George Kaye
George is the CEO and founder of Derivitec.