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PRODUCT - Functions



Derivatives

Derivatives are designed to hedge risks and are also used to roll-out targeted investment strategies whereby users can precisely specify desired levels of risk and performance to achieve over a customised time frame.
The leverage obtained means that the volume of capital employed can be optimised to achieve these results.

The OLYMPIC Banking System supports a wide range of derivatives on various underlyings, including quoted and over-the-counter products, forwards and options.

In particular, it covers the following:

  • Forward contracts (futures and forwards) and swaps:
    • stock index and interest rate: forward rates' agreement, rate swaps (fixed/variable, variable/variable, fixed/fixed, cross currency swaps)
    • currency (forward exchange agreement, long-term forex agreement, non-deliverable forwards)
    • securities, indexes and raw materials.
  • Options' agreements (American, European and Bermudan):
    • currency (vanilla, single barrier, double barrier, binary, dual currency deposit)
    • securities and indexes.

The OLYMPIC Banking System handles the full management of transactions, from the opening of an initial position through to contract settlement.
It supports all the events related to the life of contracts, processing of margin calls, exercises, assignments and abandonments of contracts, and even the generation of underlying transactions when a contract is exercised.

Real-time inquiries on contract positions are possible, either directly or via the portfolio analysis facility, with instant access to detailed characteristics on contracts, a transaction history and details on accounting entries.

The OLYMPIC Banking System in particular supports the following functions:

    • Management of contract characteristics
    • Position opening with hedge blocking, where required, for options, and initial margin calculations for futures
    • Posting of transactions and off-balance sheet liabilities
    • Real-time position keeping
    • Mark-to-Market revaluation of positions
    • Calculation of hedges and margin call tracking
    • Schedule of contract maturity dates
    • Position closing and generation of cash movements
    • Exercise of contracts and generation of any underlying orders.

The OLYMPIC Banking System automatically processes events relating to the life of contracts and therefore facilitates the work of the bank's Middle Office teams.

For example, the system offers a function to exercise in batch simple exchange options (e.g. Vanilla) held and at maturity, where the strike price is in the money.
When forward deposit contracts with an exchange option (Dual Currency Deposit) mature, the OLYMPIC Banking System can also automatically settle these contracts and abandon or exercise the exchange options incorporated, depending on the fluctuation in the exchange rate between the two currencies.
Similarly, when a Non-Deliverable Forward contract matures, the system will settle the forward exchange (or swap) transaction at the fixed rate and simultaneously generate the reverse spot forex transaction.

To further ensure efficiency, the OLYMPIC Banking System enables banks to process SWIFT messages with their correspondents and schedule transactions reflecting the processes required, integrating all the control and validation stages necessary.

The OLYMPIC Banking System is an integrated solution that banks can use to bring together all their derivative operations and activities directly concerning underlyings (rate-, security- or currency-related products) in a single, homogeneous environment.

Derivatives - OLYMPIC Banking System