Codefarm launches next generation financial optimization software for CDO structuring
22 February 2006
Galapagos Terminal enables rapid and precise CDO structuring
Financial optimization specialist Codefarm has released a next generation interface for its Galapagos product suite which is changing the way global investment banks structure complex financial products. With its simple structuring language, the new Galapagos Terminal enables CDO structurers in investment banks to specify trades more rapidly and precisely than ever before.
In less than two years, Codefarm has transformed the highly complex process of structuring CDOs from a manual, assumption-based process to an automated, objective, high-performance operation using evolutionary computing technology. The technology is also suited to other types of financial optimization.
Miles Sabin, Technical Director of Codefarm, explained: “Our Galapagos CDO structuring technology was proven effective in increasing spreads when it was first introduced 18 months ago. Now Galapagos handles difficult and subtle constraints for a wide range of product variants through much more straightforward procedures and produces even better results for clients.”
Sabin continued: “Clients can now transfer requirements specified in emails straight into Galapagos Terminal using the very intuitive Galapagos Structuring Language (GSL). Just a few basic additional commands are required and the task is packaged ready for processing.”
After submitting a trade to the Galapagos structuring engine, running on the bank’s compute grid, structurers can monitor optimization progress and retrieve the best portfolio at any point. Multiple optimizations can be run simultaneously in the background without interfering with other desktop applications. Good results are often generated within a few minutes, and results that cannot be surpassed by traditional methods take a few hours — the exact time depending on factors such as the pricing model speed, number of CPUs and the type of trade.
Codefarm’s GSL currently supports synthetic CDOs, CDO-squareds, CDOs of ABS, cash-synthetic hybrids, multiple tranches, Moody’s and Standard and Poor’s dual ratings and variable name concentration. It permits extremely flexible constraint specification in all cases.
About Codefarm Software Limited
Codefarm Software Limited is a financial software specialist deploying new optimization techniques to increase returns for investment banks and financial organisations.
Applying mathematical approaches based on evolutionary computing, Codefarm provides powerful new tools for tackling highly complex combinatorial and numerical modelling problems. Its Galapagos software harnesses the processing power of grid computing, rapidly delivering optimal solutions and evolving them to keep pace with changing market conditions. By targeting exact requirements without simplification or compromise, Galapagos automates manual processes and consistently outperforms other methods.
With a policy of recruiting high—calibre personnel who quickly grasp the complexities of new financial markets, Codefarm can rapidly tailor its products to client needs.
Codefarm’s growing client list includes many of the top investment banks and it is now a clear leader in maximising returns on structured derivatives products.
Codefarm is a privately-owned company with headquarters in Brighton, UK.
For more information, see www.codefarm.com.
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