Nasdaq has upgraded its risk management platform in response to a significant increase in demand from banks and broker-dealers. The enhancement to the cloud-based platform will help firms to better manage their liquidity and market risk during extreme market conditions, the New York-based American exchange said on Wednesday.

The number of clients using the Nasdaq Risk Platform jumped by over 50% in the last year, Nasdaq disclosed in a statement shared with Finance Magnates on Wednesday, adding that this shows a "substantial increase in demand for real-time risk capability."

Nasdaq Floats New Features on Platform

The upgrade of the Nasdaq Risk Platform comes with a number of new features, such as live view of risk across proprietary client trading portfolios, the addition of fixed income securities to the platform and the introduction of Kafka, an open-source distributed streaming system, to feed live risk analytics . In addition, Nasdaq fully incorporated its streaming option analytics solution, Nasdaq Derivatives Pricing, into the risk platform.

According to the American exchange, which managed 70% of the largest global initial public offerings in 2022, the live view feature offers detailed analytics to support real-time decision making. On the other hand, the addition of fixed income securities, such as government, corporate and convertible bonds, expands asset classes like equities, exchange-traded derivatives and foreign exchange, covered under the risk platform.

Furthermore, the infrastructure provider noted that the integration of the Nasdaq Derivatives Pricing with the risk platform means that its clients can conduct profit and loss, Value at Risk (VaR) and stress testing calculations on their options portfolios. On top of that, the upgrade also significantly improves “multi-factor and intraday stress testing tools that are capable of isolating and managing specific risks within large and complex scenario sets.”

“The extreme volatility in recent weeks has demonstrated the consequences of firms not understanding their intra-day liquidity and market risk," explained Roland Chai, the Executive Vice President and Head of Marketplace Technology at Nasdaq. Chai added that the exchange operator is “uniquely placed to help firms navigate these unprecedented headwinds.”

Nasdaq Promises “Efficient Collateral Management”

According to Nasdaq, many firms still depend on end-of-day pricing and margin calls, which is a practice that exposes them to significant intraday volatility and liquidity crunch. With interest rates rising in recent months, these firms are only going to be exposed to greater threats and bigger risks inherent in bond and derivatives portfolios, noted Magnus Haglind, Senior Vice President and Head of Products for Marketplace Technology at Nasdaq.

“Nasdaq Risk Platform provides firms with a consolidated and real-time view of risk across asset-classes, exchanges and CCPs and brings wider benefits in the form of more efficient collateral management, which can help unlock liquidity and boost returns,” Haglind explained.

Meanwhile, Nasdaq recently disclosed its plan to launch its crypto custody services by the end of the second quarter of this year. This comes as the exchange markets infrastructure provider launched its digital asset division in September 2022.

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