Ferential Systems: Innovative Financial Software for Derivative Portfolio Management and Reporting

The financial crisis in 2008 has led to a myriad of changes in regulation in the financial services industry. The modification in regulations has in turn dramatically increased the demands on valuation and reporting systems to aggregate and process a diverse set of data in response to new reporting requirements. From position valuation analysis for risk and collateral pricing through to hedge accounting reporting, firms are faced with managing a complex increase in types of market data required, types of affected collateral available and the associated changes to underlying pricing models. Assisting clients to keep up with these changes, Ferential Systems, headquartered in South Orange, NJ, provides derivative pricing, risk analytics and portfolio management applications through its flagship PYRAMID system.

PYRAMID is a multi-asset front-to-back derivative trading and risk management system that provides comprehensive valuation, portfolio management and back office processing to the Insurance and Banking industries. PYRAMID helps clients gain a comprehensive view of their portfolios across a variety of source systems, leading to operational cost savings and a better understanding of the source of net income volatility relating to hedging activities.
With a deep expertise into risk management and being the lead developer of PYRAMID, John Dukich, President of Ferential Systems describes why PYRAMID stands unique from its competitors as, “We provide our clients with industrial strength financial analytics along with the ability to seamlessly connect to other systems, helping clients to aggregate, analyze and report on data from many systems in a common framework of PYRAMID’s data structure, models and pricing analytics.”

Ferential has built a strong client base among financial institutions that includes U.S. Bank, MetLife, and Aegon. Ferential’s Insurance industry clients have significant derivative portfolios that experience large swings in income volatility. In order to mitigate income statement volatility, the companies apply Hedge Accounting valuation methodologies to their asset hedging derivative portfolios. They chose Ferential’s solution because of PYRAMID’s unique ability to load asset and derivative data from source systems as well the ability to rapidly customize work flow processes to meet changing regulatory requirements. The Hedge Accounting module of PYRAMID enables the users to customize the many aspects of hedge accounting processing to meet user’s unique accounting policy objectives.

Having derived its name from a combination of ‘differential equation’ and ‘referential integrity’, Ferential focuses on delivering practical solutions to the complex array of problems that arise within derivatives trading operations.


We provide our clients with industrial strength financial analytics along with the ability to seamlessly connect to other systems, helping clients to aggregate, analyze and report on data from many systems in a common framework of PYRAMID’s data structure, models and pricing analytics


“Going forward, we are giving a lot of attention on credit calculations, collateral management, cross-currency collateral calculation and associated pricing models. We are also planning to make a much bigger entry into the commodity derivative markets,” says Dukich.

Company
Ferential Systems

Description
Provides derivative trading, risk analytics and portfolio management applications through its flagship PYRAMID system