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No more black box

Finanz und Wirtschaft: Wednesday, October 26th 2011

Transparency Financial portal Cfinancials sets new standards for transparency. It breaks down structured products into individual components and allows precise monitoring

Quantum Leap

In terms of transparency, the structured products industry has already achieved much, and it continues its efforts to improve information and data quality. When it comes to new investment themes, we have a promising future ahead of us. In Germany and Switzerland alone, issuers develop over 10,000 structured products each day. The market reached its peak in August, as the two countries issued close to 20,000 products per day, with Germany responsible for the majority of it, 80%.

In terms of data quality and trade information, the industry has achieved real progress, especially with the introduction of exchange-traded products traded on the Scoach Switzerland and Scoach Germany stock exchanges. Products and trade have become much more transparent, giving both issuers and investors a much needed breath of fresh air.

The trend for the future lies undoubtedly in the direction of making product and trade information available to investors around the world at any time and free of charge.

In Switzerland, this trend is being pushed rapidly. Financial portal, Cfinancials, located in Lutry on Lake Geneva, gives the concept of transparency in structured products a new dynamic. The company's business model is based on financial transparency, and the latest concept of Product Mastering provides a solution for the complexity of structured products.

Cloud Computing

Top-of-the-line IT infrastructure and cloud computing make it possible. Thanks to cooperation with Thomson Reuters, SIX Telekurs, IDC and global stock exchanges and issuers, the company manages approximately 12 million financial products in its database. It has identified more than 400,000 base values on which the 12 million products have been issued.

The focus is on data from all product categories with a ten-year history - from hedge funds and stocks to structured products. Product Mastering can be understood as a kind of product-specific dashboard that monitors the interior, composition and risks of each underlying security. Using the latest computer technology, users can check thousands of instruments for risk and market target in a flash.

Each product can be found according to various criteria such as currency, product category, basis-type, barrier type, barrier status, as well as term and due date, risk class and maximum yield. After the criteria are selected, the result will be created on this basis, where "high to low" and vice versa can be selected. Users just have to click on the products found and receives the inner life and composition of the instrument in detail.

The structured product is broken down completely into its constituent parts, and the underlying assets as well as the individual components of the structure - including the fees - are displayed. They will then be evaluated with appropriate indicators such as price, yield to maturity, price differential, credit default swaps (CDS), earnings per share (EPS), volatility, price-earnings ratio (P/E), dividend yield, correlation and dividend payout. Each indicator is complemented with a visual representation and graphics such as pie charts. The indicators are selected as they are with Bloomberg, and the parameters can be customized.

The various commercial product information such as bid-ask spread, average spread, best bid and offer price, best offer volume, average demand and sales volume, spread availability and course status, due date as well as the term sheets is also available. The user can set individual warnings.

Transparency

Additionally, real-time business news is accessible. It can be filtered by topic such as product-related news, updates on industry news or used for research. All information is accessible from any digital network for up to 10,000 users. The price for this is CHF 10 per instrument, per month.

Product Mastering is available as in a full or partial version. It is designed for monitoring by bank management, for cost management, as a marketing tool for relationship managers - and it provides customers with unprecedented transparency. This allows Cfinancials to set a new standard for performance analysis and product monitoring. Structured products do not have to be a Black Box in the investment portfolio anymore.