4sight has launched 4sight Synthetic Finance, an equity derivatives software solution for synthetic prime brokerage.
Basel III capital requirements and balance sheet pressures are increasing costs for prime brokers servicing hedge fund clients.
Synthetic trades using equity derivatives enable significant netting and balance sheet efficiencies across counterparties compared with traditional securities finance structures.
This is resulting in a growing trend for prime brokers to launch enhanced Synthetic Finance services for their clients. Their hedge fund counterparties gain exposure to a wider set of international markets and products with a reduction in operation costs and complexity.
The 4sight Synthetic Finance system supports the full equity derivatives lifecycle. It offers a front to back office solution for swap transactions including Contracts for Difference (CFDs), Total Return Swaps (TRS) and Portfolio Swaps over a range of underlying assets including Equities, Futures, Bonds, Index/Sector Indices and Custom Baskets on a single or cross-currency basis.
The system provides workflow and control for position management, trade entry, corporate actions, settlement and reporting. Integration with 4sight’s Xpose collateral solution provides collateral management and margining support. As a real-time management and calculation system, 4sight Synthetic Finance is ready to meet the demands of regulatory reporting requirements for Dodd-Frank and EMIR.
Furthermore, clients can install the 4sight solution as a stand-alone module or as an integrated component of 4sight’s Securities Finance product suite. This provides prime brokers with a one-stop shop for prime financing, including synthetic and physical trading, real-time inventory, collateral optimisation, margining and financing.
4sight Synthetic Finance makes use of the latest technologies available from Microsoft and Oracle, offering scalability and the ability to adapt to changing operating models.
Alastair Chisholm, 4sight’s Managing Director Comments: “We are delighted to announce the launch of the new Synthetic Finance solution, which naturally complements 4sight’s existing Securities Finance and Collateral Management product suite. We expect significant growth in the equity derivatives and synthetic finance space in response to the regulatory pressures facing prime brokers and their clients. This latest addition to our product range enables 4sight’s clients to take advantage of this trend and establish new revenue streams as synthetic trading gathers pace.”