A Canadian technology company that helps stock brokers, investment bankers and corporate treasurers navigate the labyrinthine world of derivatives is to establish its EMEA headquarters in Dublin, creating 30 new jobs.
Part of a €500,000 investment, 17-year-old Vancouver-headquartered FinCad is to establish its EMEA headquarters in Blackrock, as it plans to target the European derivatives market.
The company estimates that the financial derivatives market in the EMEA region alone is worth over US$150trn.
FinCad provides over 1,400 financial modelling products, including commodities, convertible bonds, credit equity through to fixed income, foreign exchange and municipal bonds.
“Essentially, we convert specialised maths into software,” said the company’s chief executive and co-founder Bob Park. “Our customer base is diverse, but the one thing they’ve got in common is a need to value derivatives or manage the risk of them.”
Park explained that as well as investment and commercial bankers, corporate treasurers and government regulators, the company has a strongly developed OEM channel where large business software firms include its technology in deployments.
FinCad has 70 direct customers and indirectly more than 3,000 organisations across the world use its software.
“Because we’re based in Vancouver, we’re not very close to the markets we’re targeting, although the internet and our sales model serve us well,” Parks said. “The factor in our decision to come to Dublin was the fact that Europe is the major derivatives market in the world.
“We believe that more than half of all derivatives are held in Europe and we don’t think we were getting our fair share of that because there’s an eight-hour time difference and it was hard to target European clients.
“We’re confident that this strategy will pay off for us and our target is to get 25pc of the European market.”
Parks said that the operation will initially be a client services and sales operation. “But we’ve been advised that there are R&D incentives in Ireland that are similar to Canada. We will look at the appropriateness of putting key people in R&D roles into Dublin. The key issue for us will be finding the right talent.”
Parks said that because of the credit crunch provoked by sub-prime lending in the US, European asset managers are left holding onto derivate instruments they were sold by Wall Street investment managers.
“Wall Street has been very successful in marketing these to asset managers here that were yield hungry. As a result, there’s significant demand for better tools and information to allow European asset managers take more control of their assets.”
He cited Saxon Bank in Germany, which was left with €17bn on its books and has since been the object of a takeover bid.
“If you were trading shares in Diageo or General Electric, every share would be identical. However, derivatives are unique, one-of-a-kind financial trading instruments and the Achilles heel for most investors is having the analytics to cope with the different types,” Parks said.
By John Kennedy