F3 Technology
ULTIMATE FLEXIBILITY - CUSTOMIZE EVERY ELEMENT OF A DEAL
In response to the rapidly changing lifecycle of derivatives risk analytics libraries, the F3 SDK provides ultimate flexibility to users who require the ability to customize every element of a deal.
The key to success in the derivatives industry is the ability to deliver innovative financial products that investors are willing to pay a premium for while maintaining margin. Financial institutions have competed to commoditize new derivative products and integrate these instruments into their technology systems, which has shortened margin cycles. To counter this, financial engineers have been driven to create more granular and bespoke products for their customers. In an environment where time-to-market is critical, the need for highly flexible structuring tools has been a major business driver that fuels developments in financial engineering technology. Enter F3 SDK.
F3 SDK is an object-oriented software development kit that allows developers to embed FINCAD's next generation generic financial analytics library into their existing applications and systems. It is FINCAD's most flexible analytics solution that provides access to objects at a granular level and allows users to customize everything from date conventions to payoff schedules.
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F3 SDK is the first product in FINCAD's innovative F3 line that is based on its new best breed generic financial analytics solution. Not only do F3 analytics libraries represent virtually any financial contract without programming, the software can implement generic numerical methods not tied to any particular model or valuation methods.
To understand F3 SDK, it is important to look closely at how valuation and risk are derived. Valuation and concomitant risk calculations require two principal inputs: the legal contract structure that describes each party's rights and obligations, and the observable financial data that is available from financial markets. F3 SDK uses these two inputs to value the contract and to calculate the exposure and risk to every element of market data that is used in the calculation.
The unique characteristic of F3 SDK's method is that it is truly generic; it guarantees that value and risk exposure can be accurately calculated for any contract, irrespective of the financial model used, or the numeric calculation methods employed. FINCAD's method is so unique that a patent is currently pending on its F3 SDK analytics.
F3 products also include a generic Monte Carlo engine that can be used with any model or payoff combination; it is an essential tool in the financial engineer's toolbox. In F3 products the description of the financial product and its payoff are separated from the act of valuing it. A financial product in F3 may be valued using one or more models that allow both model risk and performance to be assessed in real-time. Built on a stateful, object-oriented architecture, F3 SDK can price virtually any deal including complex trades and structured products. A simple API makes integrating with existing systems a simple task, and its ability to map to existing trade representation languages offers smoother integration and faster time-to-market. An important advantage of this design is that products can be described and managed without programming.
In the evolving market, new investment products continue to be developed and investment clients need to increase their returns while effectively managing risk. It can often take months to add new products to existing systems. Despite the availability of emerging products, many financial institutions or software vendors who support them can't offer new products to their customers as quickly as they would like. F3 SDK is the solution to this delivery dilemma.
F3 SDK analytics are fully open and well documented. Every single parameter and method used to calculate a product's pricing is completely traceable. This satisfies customers' demand for complete transparency in valuation - a driving need given the recent growth of regulatory requirements in the finance industry. In addition, only F3 SDK makes it possible for new financial products to immediately be added to an existing financial analytics library at a fraction of the cost of competing products.
SimCorp, a leading provider of highly specialized software and financial know-how for more than 30 years is the first company to use F3 SDK. In addition, SimCorp has joined FINCAD as a trusted technology partner. Other partnerships are in the works that underline how necessary F3 SDK is in the marketplace.
» Read the SimCorp case study
With F3 SDK, a company faced with a new product to price can describe it using ready-made objects and models. The object-oriented design of F3 SDK allows the user to manage the description of a financial product, the market data, the model, and the numerical method used for valuation separately.
F3 SDK also supports multiple development environments and operating systems, including C++, C# and Java in MS Windows, and C++ and Java in RedHat Linux and Sun (SPARC and X86). To enhance performance, F3 SDK can distribute calculations across a grid. Look for upcoming performance enhancements by added support for graphics processing units (GPUs).
FINCAD believes that F3 SDK is the only product of its kind to guarantee the ability to determine value and exposure risk for any combination of financial instruments, model, and calculation method. FINCAD's confidence to offer this guarantee is due to the proven generic method F3 SDK uses to make these determinations.
In conclusion, F3 SDK's provides the most transparent view of the value and exposure risk for an investment. The industry is heading into an increasingly regulated era in financial markets. Risk management considerations are increasingly important and black box or ad hoc pricing practices will no longer be accepted. More transparent disclosures of the processes and methods behind pricing are needed. Transparent solutions such as F3 SDK will be preferred by professionals in the financial industry.
Contact a FINCAD representative today to start your trial of F3.