Volatility in the interest rates market, driven by policy-setters and central banks adapting their base rates to the changing economic landscape, has combined with high levels of illiquidity in banking systems to create uncertainty in pricing for even the most vanilla of interest rates derivatives.

Deep concerns about the liquidity and viability of the world's banking system mean challenges for institutions seeking to hedge interest rates exposures on their books. Some banks and funds are now struggling to build consistent yield curves as a result of illiquidity and subsequent difficulty in pricing short-term interest rates and basis swaps.

SD's Interest Rates Next Generation was developed following feedback from hundreds of clients, as well as managers of interest rates derivatives trading and sales desks, corporate treasurers and risk managers. SD has experienced unprecedented demand from banks, asset managers and corporates for advanced tools to manage interest rate derivatives.

SD now delivers the widest coverage of interest rate products and structures with flexible curves, vol surfaces and robust basis swaps, supported by communication, management and trade execution tools, to assist with hedging, risk management and investment decisions.

Market professionals using SD's Interest Rates Next Generation in their growth strategy can now trade high margin, tailored sophisticated structures - as easily and efficiently as plain vanilla products. As is the case with all SD solutions, Interest Rates Next Generation is web-based and operates in real time for immediate implementation and scalability, with connectivity to over 10 years of historical database for analysis.

Interest Rates Next Generation can easily integrate into any information and trading architecture, connecting various trading and sales desks and interfacing with middle and back office systems seamlessly and efficiently - linking banks to their clients, reducinng operational risk and facilitating faster trading.

The system brings together all the front and middle office functionalities required to effectively manage interest rate derivatives in a trading and workflow application, with thin-client pricing, helping users to manage compliance, market and counterparty risk and audit requirements.

Lewis Ranieri, board director at SD and recognised as the creator of the securitised mortgages market, said: "SD's Interest Rates Next Generation can modernise the management of interest rate derivatives businesses through technology and analytics by delivering tools that help institutions manage their risk profiles and operational risk much more efficiently and effectively.

"In this difficult environment financial institutions are required to maintain a high level of internal transparency about their derivatives operation. The SD interest rates next generation solution can deliver this."

Russel Levi, Executive Vice President, SD, said: "The interest rates derivatives technology at banks has not improved significantly in the past few years and derivatives prices have remained relatively opaque.

"SD Interest Rates Next Generation enables both the sell- and buy-side improve efficiency and productivity, and introduces unparalleled price transparency, which is crucial in this environment.

"Low short-term rates and steep yield curves are driving trade in interest rate derivatives, but institutions need the tools to adapt to the current levels of volatility. SD solves this problem very efficiently."

SD's Interest Rates Next Generation solution includes:

• Real time access to independent, calibrated interest rate curves, real market volatility surfaces and yield curve spreads from the most accurate and reliable sources of market data and prices in all major and emerging markets
  
• Turnkey solution to easily price all the structures in the market place, including all callable CMS and CMS spread structures with market implied correlations, inflations structures and various structure notes
  
• Sophisticated basis swap curve control with market calibrated spread as default
  
• Tools to export and import curves including basis swaps and basis spreads, inflation, OIS and BMA
  
• STP into internal or external back- office or risk management systems
  
• Cutting edge tools to automate the activity of sales staff and increase their productivity including automatic term sheet generator, distribute trades and structures to clients and enhance business generation for market making institutions
  
• Portfolio management blotter and report with sophisticated sorting of transactions
  
• Alert and monitoring system to support clients hedging and position management.
  
• On-line execution capabilities between sales desks and trading desks and clients to banks
  
• Built in communication tools between the front, middle and back-office