SuperDerivatives, the benchmark for option pricing, risk management and independent revaluations, is continuing its stated mission to bring transparency to financial markets with the launch today of SD-EQ.
The new system takes equity option pricing to a completely new level with its ability to deliver real-time accurate market prices for a wide range of vanilla and exotic products. The system incorporates feedback from banks' traders and sales people, as well as hedge funds and exchange-traded option players.
"SD-EQ meets an unmet market need for real-time accurate pricing of derivative equity instruments," says Lewis Ranieri, Chairman of the SuperDerivatives Advisory Board. "In terms of price accuracy it serves as a bridge between the exchanges and the over the counter markets. In addition to improving the pricing capability for vanilla options on stocks and indices, SD-EQ provides a solution for the growing demand for equity exotic options. Setting the benchmark for equity options will introduce a new level of transparency for both pricing and revaluation of positions," he adds.
SD-EQ combines real-time data from both the regulated exchanges and the over-the-counter market. Because it uses the SuperDerivatives benchmark-pricing model, it is able to produce the market price for an extremely wide range of options, including the latest exotics, on numerous individual equities and indices instantly. It is also fed with real time foreign exchange rates, so users can price and risk manage stocks and indices in any currency they choose. This makes cross border investments easier to price and risk manage.
"Since its launch in 2001, our currency option system SD-FX has helped lead to an increase dramatically in the number of users and therefore also the volumes traded in foreign exchange options. There is a consensus among the biggest equity options exchanges in the world and over-the-counter brokerage firms that the transparency in option pricing that SD-EQ will introduce is going to increase liquidity in equity options quite significantly," says David Gershon, the chief executive of SuperDerivatives.
Like all of SuperDerivatives' products, SD-EQ comes loaded with extremely rich functionality, such as the ability to use real-time correlations to price baskets of options and sectors, illiquid stocks and select any base currency for the options. It also includes a special module to accurately price and revaluate stock options granted to employees (ESOP). The module includes powerful tools such as uploading from existing databases, examining scenarios of exercising and developing policies for employees' compensation.
"The ESOP module is something that many US corporations have been crying out for. It will help them comply with the stringent FAS 123 accounting standard arguably in a way they have never been able to before," concludes Gershon.
SuperDerivatives' products are used by numerous companies from both the buy and sell side. Its pricing platform for currency options SD-FX is used by almost all the banks around the world that are active in FX options, and numerous corporations and hedge funds, auditors and central banks.