Hydra
The Hydra platform has been designed by expert structuring, trading and risk management specialists for private and investment banks offering OTC FX products to their clients. Hydra supports any combination of vanilla, 1st and 2nd generation option structures for all currency pairs on the same screen. Additional, customised products or structures can be created and delivered normally within days. Hydra uses Digital Vega’s proprietary market data feeds and models to deliver accurate and benchmarked pricing across complex products and portfolios in seconds. In active markets where traders and salespeople are constantly asked to price many complicated structures, Hydra will provide significant benefits. Hydra is new platform based on modern technology and has been designed from the outset as a modular solution enabling easy customisation to each client requirements. It is also seamlessly scalable thanks to its cloud architecture.
Indicative Pricing
Indicative pricing is supported by Digital Vega’s composite vol surfaces updated in real-time from bank providers and including event weights for assured pricing accuracy. We can also integrate with your own in-house vol surface and price using our models. Pricers include solving and optimisation tools to arrive at the optimal strike, barrier or entry level quickly and easily.
Hydra has full historic market data making it easy to analyze and explain valuation history. Simulating mark-to-market and risk under different scenarios is all available in seconds through the GUI giving you complete control over your client and portfolio risks.
Analytics
Using the pricing tools, salespeople will be able to rapidly respond to client requests or share ideas and provide supporting analytics including:
• Current mark-to-market and Greeks
• Spot ladder of mark-to-market and Greeks at current or future date
• Vega by Bucket
• Delta by Tenor
• Cashflow analyses
• All outputs can be easily added to a clipboard to rapidly create client-facing trade ideas or presentations.
Collaboration and Workflow Management:
Hydra provides a comprehensive collaboration layer across trading desks, sales desk, clients and middle office making it easy to generate and share trade ideas.
Salespeople can initially create and share accurate, indicative trade ideas or strategies securely with clients without constantly harassing trading desks. Such strategies can be edited and updated on the fly and immediately repriced and a full event audit trail is maintained. Strategies can also be saved and shared by all users and can easily be repriced using either live market data or historic data snapshots.
Once a client has confirmed interest in executing a transaction, the strategy can be immediately sent to the trading desk for firm pricing. Once executed, the trade can be captured in Hydra using its client database details and then sent to middle office using a proprietary STP connection.
At point of execution, the new transaction immediately populates the trading desk blotter allowing traders to manage risk, particularly underlying spot risk much more quickly and efficiently. This seamless and fully integrated solution will revolutionise the current complex and very manual process required to deliver accurate indicative pricing of complex structures to clients. Providing the ability to refine specific details, consummate a transaction and finally book and manage the resulting risk positions in seconds will significantly reduce both market and operational risk.
On Screen Term-sheets
Each product has available a complete English description of the main terms displayed next to the product each time it is priced in order to avoid any ambiguity. This can be customised to individual specific requirements.
Liquidity and Execution
Hydra liquidity and execution is an integral part of the platform strategy. Vanilla options are already supported with liquidity from 21 banks.
Second generation exotics execution is currently underway with four banks in development. The second group of banks will be implemented during Q4 2023 with more coming on stream during the rest of the year.
Trading desks will then have the ability to cover client trades quickly and efficiently without the need to manually re-key complex structures into multiple single dealer platforms or chats. The trading desk will already have the executed client trade in front of them from which an RFQ to multiple liquidity providers can be submitted in seconds
Digital Vega already runs the most successful vanilla option trading platform: Medusa, which has clearly demonstrated the benefits of seamless, aggregated liquidity. For busy trading desks, the ability to simultaneously request pricing of complex structures from multiple liquidity providers in competition delivers a huge range of benefits:
• Enter request details once; huge reduction in errors, time to price and execute transactions
• Automatic sanity checks on pay-off criteria such as schedules; Hydra checks and validates all inputs and price responses to ensure accuracy
• Full audit trail and trade reporting suite
• Embedded best execution reporting and analytics
• White-Label pricing and spread management engine
Credit and Exposure Management
Hydra includes a comprehensive array of both credit and market risk management tools.
In order to efficiently manage client market and credit risk across complex portfolios, Hydra provides a unique new credit engine. Users are able to create entities to which a credit curve can be attached, either individually or as part of a larger group entity and store credit agreements between such entities. Credit exposure metrics such as PFE and CVA or marginal CVA increase for a new trade can be calculated on the fly.
Accurate and robust exposure calculations mean that margin requirements can be managed much more efficiently, proving much greater levels of flexibility for all parties. The credit engine also provides a configurable suite of detailed position and exposure reports that can either be run on an ad-hoc basis or automatically at end of day. Finally, configurable alerts can be set up based on user or event type preference; barrier proximity, expiry etc.