MAIA Technology’s Grace Cain explains how the firm’s partnership with Wolfram Risk is delivering better outcomes for clients and improving their understanding of portfolio risk.
Having been born within an asset management business, we understand the operational challenges fund managers face daily. And as an organisation, we seek to operate as efficiently as possible, which sometimes means collaborating closely with trusted partners.
Since January 2021, we have been working with London-based Wolfram Risk, which provides comprehensive risk management solutions for alternative investment managers.
“The collaboration with Wolfram Risk came after we found some of our hedge fund clients were using third-party risk providers, which was essentially quite expensive for them, particularly when they often didn’t need the full range of services,” says Grace Cain, software developer at MAIA Technology. “We wanted to make risk more accessible to our clients.”
MAIA partnered with Wolfram Risk because of its reputation for high-quality risk analytics delivered through a modern API, incorporating its risk software into our market-leading, cloud-native platform.
“Technically the process involved integrating their API into our platform allowing clients to use our interface to access the risk analytics,” says Cain.
As a result, we can now offer our clients a technology-led solution deployed in AWS, delivering risk data for global single-name equities, equity indexes, equity ETF/CFD, futures, options, currencies, commodities, and exchange-traded fixed income.
Making processes more efficient
Risk analysis is a time-consuming and critical part of day-to-day operations for hedge funds. That is why we offer P&L ex-post analysis, Value at Risk (VaR), options analytics, scenario analysis, and exposure analysis as part of our core offering.
Our VaR tool facilitates the calculation of VaR on the current portfolio or any historical portfolio. It allows users to choose from four different input models – Monte Carlo, Analytical, Historical and Hybrid – and define the calculation type or data supplied to the models.
“VaR calculations can be quite tricky because of their complexity and the computing power required to perform them,” says Cain. “So, integrating VaR reports into the MAIA platform has been powerful because it is delivering the power of the Wolfram engine to our clients.”
In addition, users can also back test VAR model settings to ensure they are correctly configured, an increasingly critical feature for regulators, which usually demand to see back tests to ensure models are representing risk accurately.
Option analytics can reveal all the options exposures within a portfolio and performance attribution. Scenario Analysis provides a library of historical scenarios allowing clients to take their portfolios through history and explore how they would perform during historical events, such as the Covid-19 pandemic or the Global Financial Crisis.
Finally, exposure analysis highlights various exposures such as beta, option Greeks, credit and rate sensitivities, and liquidity analysis for equities.
The solution calculates analytics for display within MAIA and, in combination with position and trade data, creates a live view of your risk. It is a web-based GUI that enables users to create their own views and authoritative reports, which can be distributed company-wide.
“We can make it bespoke to our clients’ needs, and as the Wolfram offering grows, we will be able to offer our clients even more metrics,” says Cain. “It is something that adds value to the MAIA platform and has been built in collaboration with clients, ensuring the final product reflects current requirements.”
Our risk engine is suitable for all types of strategies across a range of asset classes, whether clients are running a long/short equity strategy or a global macro fund.
Continuing to innovate
Our partnership with Wolfram Risk is just one way we continue to invest and innovate at MAIA, ensuring our clients have access to the services and tools they need for their day-to-day operations. MAIA was built on a trading desk and designed to operate in a relatively complex environment, so speed and functionality is vital to us.
The MAIA technology stack is entirely cloud-native, and the system provides exceptional scalability and flexibility, which means we can adapt as our clients’ needs change. And our fluent API-led approach allows our clients to build their own bespoke platform, covering compliance, risk management, and order and execution management.