CubeLogic Expanding into A Commodities-Focused Advanced Analytics Enterprise Risk Solution
CubeLogic has put out a series of announcements over the last couple of years signaling its broadening of focus beyond credit. These included the acquisition of FERDEC and a partnership with Numerix for advanced risk analytics, and much more. I recently talked with Ian Sloggett, sales director at the company to get an update. “Founded in 2009, CubeLogic is already more than 100 staff located in 6 offices with 45 customers across 6 industries,” he said. “While probably best known for credit risk historically, CubeLogic is now covering many areas of risk including market and regulatory risk and is expanding into other asset classes beyond commodities.” Its’ Riskcubed software provides a repository for all risk data along with calculations and analytics, workflow and data visualization, and reporting, he told me.
“The solution provides event-driven real-time risk. It features alerting so that as say, a new deal is entered, everything is recalculated,” he said. It is also moving into providing Risk as a Service where the client provides the positions and CubeLogic provides back the results and it sees a lot of interest in that kind of service. It seems that CubeLogic is rapidly becoming a holistic risk overlay product that aggregates data from multiple CTRM’s and other solutions in order to perform comprehensive risk reporting in near real-time. “We use agile technology that is easy to implement and provide aggregation and slice and dice reporting to our customers,” he said. “This year, we are accelerating our VaR and PFE offerings via Cubecalc, a module that offers P&L explained, parametric VaR for linear portfolios, and real-time dashboards.”
On the regulatory side, Ian notes that regulatory fines have teeth and that small and large firms have been fined – some fines being up to $43.5 million. ”That’s a serious financial hit and also a reputational issue,” he said. He goes on to explain that in the initial push to procure applications for regulatory compliance, many energy and commodity firms bought into solutions from the fintech side of things. “These solutions do not natively understand physical commodity products and markets and so capturing commodity market abuses like physical withholding, capacity hoarding, and settlement price manipulation is an issue,” he said. CubeLogic has benefitted from having developed compliance solutions with energy and commodities in mind and now find their product replacing some of the earlier non-specific solutions on the market. CubeLogic has also expanded into position limits as well with a new product recently released.
On the market risk side, Ian describes its first foray into the market as offering position/PnL and aggregation across business lines and systems. “Some companies were really struggling to reconcile finance’s view of PnL with the front office view. We are well-positioned to plug that gap and gave firms a more holistic view of market risk across the enterprise,” he said. CubeLogic is adding new capabilities as well around exposures and VaR with a parametric VaR solution out by year’s end. “We also offer a full and complete solution in partnership with Numerix for those that wish a more analytics-rich solution for complex portfolios.”
Plainly, CubeLogic has expanded its footprint beyond credit and is now better seen as a commodities-focused advanced enterprise-risk platform, and actually, this remains an underserved market where it should do extremely well.
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