TriOptima turns to gaming to measure risk Technology used by computer gamers rather than traders is to become part of a new push to meet regulatory demands as banks and brokers seek to determine how much capital they need to hold. TriOptima, a Swedish trading technology group, has turned to chips used to power games like Tour of Duty, Batman: Arkham Asylum and Assassin's Creed to measure dry financial calculations like credit value adjustments, the value of risk weighted assets and potential future exposures. IN Trading Technology The venture has in part been driven by concerns that banks don't currently have the computational power needed to make the sorts of calculations required by regulators to meet new rules around capital requirements. Broker-dealers and banks need to find answers to the controversial issue of determining accurate values of counterparty credit risk in the over-the-counter derivatives market. ICAP-owned TriOptima announced on Monday it was preparing a push into measuring banks" risk exposure through a licensing agreement with Global Valuation Limited, a small UK-based financial services consultancy. The service, called triQuantify, is due to be launched later this year. TriOptima and GVL are developing a service based on the idea that it can be done used adapted graphics chips of the type found in driving or shoot-em-up games. The chips work in parallel, breaking down a complex tasks into many parts and performing calculations simultaneously. This, they argue, makes them more suited to processing large interrelated blocks of data. "This is a game changer," says Per Sjoberg, chief executive of TriOptima. We have a lot of banks wanting to take it in the pilot stage. These valuations have come to the forefront of banks" plans as global regulators tighten capital requirements to safeguard the financial system and prevent the failure of one institution from jeopardising the future of others. They are vital as the calculations in part determines how much capital the banks are required to hold. However the methods used to calculate them are proving to be among the most controversial and complex topics in a post-crisis world. Regulators and even some rivals have raised concerns that some banks are understating the riskiness of the portfolios in order to cut their capital requirements. Last week a report by the Basel Committee on Banking Supervision found that global banks were using vastly different ways of calculating their risk-weighted assets, allowing some to hold only one-eighth of the capital held by their competitors against the same assets. Claudio Albanese, an academic and founder of Global Valuation Limited, has argued that the underlying assumptions on which banks" models change from institution to institution and often cannot be reconciled from instrument to instrument. Proper valuing and hedging counterparty credit risk involves analysing large portfolios of netting sets over time horizons spanning decades, he argues. "Running portfolio simulations on a global scale consistently and with high quality models is an overdue concept whose time has finally come," he said. TriOptima, which specialises in middle- and back-office processing of OTC derivatives, will integrate GVL into triResolve, a management service used by around 250 financial institutions that daily reconciles the vast majority of all collateralised over-the-counter derivatives businesses. TriOptima said the new service could be used by banks and brokers to validate and benchmark existing risk calculations or as an outsourced risk service. It also plans to have its risk models and processes for calculating counterparty credit risk approved by regulators. ICAP paid €109m to buy the 62 per cent it did not already own of Sweden's TriOptima in 2010.