Published on 18 Jun 2013
"Redesigning our settlement practices around optimization and analytics has proven to be a game changer for us as a company. It also enables us to show the rest of the world the kind of change that’s possible when you’re willing to commit to it." - Jaime Villaseñor, Chief Risk Officer
Smart Work, Smarter Commerce, Smarter Planet
BMV Group operates Mexico’s only stock market. Indeval, a unit of BMV Group, is Mexico’s central security depository, with responsibility for the timely and reliable settlement of securities trades. Jaime Villaseñor, its Chief Risk Officer, and a group of his colleagues at Indeval drove an effort to enable near real-time settlement by leveraging prescriptive analytics.
The Indeval board provided the impetus to improve the efficiency of its settlement processes and supporting systems. Incorporating advanced “matching” algorithms gave Indeval the means to put into place what had been a hard-to-attain industry ideal – Model 3 settlement practices. Perhaps by design, the Indeval Dali system has raised Mexico’s prestige in financial circles. Most importantly, its customers have reduced their risk and financing costs through efficient net near real-time settlement.
Instrumented: Customer account transactions are automatically sent to the Indeval Dali system for near real-time processing. Interconnected: The Dali system is integrated directly with its customers trading systems. Intelligent: Every two minutes, Dali runs tens of thousands of trade instructions and real-time account information through sophisticated optimization algorithms to determine the best selection of which trades should be settled and in what order.
The benefits of the Indeval Dali settlement solution • 52 percent reduction in the amount of cash its banking customers need to carry on hand to cover trade settlements • 26 percent reduction in the amount of the security requirements related to trades •US$240 million reduction in the interest costs associated with settlement liquidity requirements in the first 18 months of operation • Substantial reduction in settlement risk by virtue of near real-time intraday settlement capability • Global prestige associated with being a world leader in innovative settlements capabilities
Smart is...Optimized trade settlements. Interviewee: Jaime Villaseñor, Chief Risk Officer
IBM products and services that were used in this case study.
Power: System p5
IBM ILOG CPLEX Optimization Studio