The motivation behind the development of the PriceWorX financial application
is the recognition by industry experts that the pricing of financial instruments
is part mathematics, part programming, part financial experience. PriceWorX
provides the solution to these challenges.
The dilemma a financial engineer is faced with, for example, on a simple
equity option, is whether to use the Black and Scholes or binomial models,
and whether to use discrete dividends or dividend yield. The question of
which pricing function applies to which instrument, however, presents only
one dimension of the pricing dilemma.
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Interactions with Treasuries
and Risk Departments often reveal the degree to which trading desks, and
banks in general, depend on the skills of few individuals in pricing derivatives.
To exacerbate the matter, it
is precisely these individuals who are most active in the market, and
who have the least time to audit their process of development work.
It is behind this background
that RiskWorX, a South African risk management consultancy, have commisioned
Mdio Software to develop PriceWorX. It aims to provide market participants,
both financial services organisations and corporates, with an easy-to-use
front-end tool for validating prices of complex financial instruments.
This pricing application is benchmarked against industry standard tools,
and is constantly kept updated with the latest in specific market conventions,
and data issues that may impact pricing. Additionally, on a regular monthly
basis, new instrument pricing is added, and the functionality of the system
is grown alongside the market.
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