"Due to the financial crisis the last couple of years, liquidity has become even more in focus than before," observes Erik Ohman, head of operations, Swedbank Markets at Swedbank. The Nordic financial firm is testing and plans to start implementing Aleri's Liquidity Risk Manager complex event processing software around New Year's Day. (Liquidity risk is the risk that a given security or asset cannot be traded quickly enough in the market to prevent a loss or make a profit.)

This change in technology platform doesn't represent a new way of handling liquidity risk, but a more efficient way, Ohman says. For instance, using Swedbank's old system, if a major counterparty failed, it would take a couple of days to a week to get all the data and tools together to assess the impact on the firm's liquidity. Using the new system, this can take place within a day, Ohman says. "There's a substantial difference," he notes.

The new platform will also help the firm start preparing for new regulations and reporting requirements for liquidity risk that are expected from the FSA and other European agencies in 2011, Ohman says.

The new software will also be used for a lot of stress testing, to see what would happen to the bank's liquidity in the event of a Lehman bankruptcy or any other irregular market event, or several atypical occurrences at the same time.

One reason why Swedbank chose the Aleri software was the the firm has been using Aleri's liquidity management software for two years. "This will follow up on and use the knowledge we have in the liquidity management system," Ohman says.

Swedbank IT executives expect to be able to use the CEP platform straight out of the box. However, integrating the software to all the different sources of position and liquidity data is a project in itself that will take about a year, they say.

In addition to these liquidity projects, Swedbank is about to deploy a new back office application that should decrease operations risk. "If we can prove we have good order and quality in our operations, that will also help us with our capital requirements," Ohman says. "There are also financial reasons to do it, and customers are most anxious that we have good operations, that we do our confirmations, clearing, and settlement in good order." The new application should be implemented late next year and Ohman hopes it will change the way operations staff work, from silos to more of a process-driven workload.