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Topaz Technology’s Risk and Analytics Solution

The CTRM landscape remains one that is quite crowded with over 100 vendors and products on the market. Of course, at any one point in time, just a handful of names dominate, and these may be the only vendors known by many in the market who are looking to procure a CTRM or related solution. That is where ComTech can provide a service. We can help ensure that any firm looking at the CTRM/CM marketplace software understands the choices and options available to them. Anyone looking at their options can utilize our free online directory, CTRM Sourcebook, or indeed the hundreds of articles, videos, podcasts, and papers freely available to all on CTRMCenter.

We have recently become aware of a host of newer entrants into the market and have added them to the online directory and, in some instances, written articles about them. One of those is Topaz Technology, and a couple of weeks ago, we had a demonstration of its software. We came away from the demo thinking that Topaz, as currently configured, is more of an advanced risk analytics platform by our definitions and indeed features far more sophisticated risk analytics than the average CTRM. Topaz is a modern technology platform, and it is event-driven. It tracks everything, meaning it has a complete audit trail of all actions taken on the system, and users can always recover snapshots of historical data.

The solution features a highly usable UI and really looks like a set of customizable and personalizable reports or dashboards. So, as we were shown, setting up stress tests is just another report, and so on. Another design feature is ‘calculation profiles’ that allow calculations to be set up and configured by choosing and selecting the calculation formulae features. This provides the solution a great deal of flexibility in the area of any form of calculation. The solution handles VaR (parametric, Monte-Carlo, and others), PnL, stress testing, curves, and more and allows detailed drill-downs to figure out why changes occurred. It also handles valuations, including physical optionality. It all adds up to a lot of risk analytics and similar functionality, as said above.

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It’s always difficult to report on a demonstration as unless a solution is used ‘in anger,’ a lot remains unknown. However, the demo indeed showed a great deal of flexibility. Also, it highlighted several design features that are based on a depth of understanding of how things work in the real world of commodity trading, in our opinion. Currently, Topaz has a couple of customers in oil and gas. Still, it is a multi-commodity solution, and as Jon Fox told us that they are “doing a lot of work around power and renewables at the moment both in terms of things like PPA flex contracts and in integrating with all the appropriate trade venues.”

Being cloud-based, modern technology, and with design features like the calculation profiles, event-driven, and so on, Topaz holds a lot of promise. As John had told me in a previous briefing, “The Topaz platform provides real-time, cross-commodity risk management and valuation services,” he told me, adding, “We took the time to design the optimal architecture for Topaz, selecting the best technologies for our customers’ needs. We have leveraged modern open-source technology to create a scalable distributed system.” We will keep a close eye on the vendor to see how it and the software does.