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The University of Southampton
Centre for Risk Research

Research team helps City firm to "significantly improve" risk management practices

Published: 12 January 2016
Increased risk management

An article published by the Economic & Social Research Council (ESRC) has highlighted the excellent results achieved by a research team from the Centre for Risk Research while working on a Knowledge Transfer Partnership (KTP) with the financial trading firm London Capital Group Holdings.

The ESRC article highlights how researchers from the Centre for Risk Research have helped London Capital Group (LCG) to significantly improve their risk management procedures - increasing sales by £250,000 and leading to expected profit increases of £2.2 million.

The KTP project team was comprised of Professor Ming-Chien Sung (Principle Investigator), Professor Johnnie Johnson and Dr Tiejun Ma (Co-investigators) and Juan Carlo Moreno Paredes (KTP Associate).

 

As a result of the KTP, the efficiency and effectiveness of London Capital Group’s (LCG) risk management decisions have increased significantly. Due to the client risk assessment model developed during the KTP, many hedging decisions are now automated - thus reducing costs. These cost reductions have allowed the company to lower their prices, which has attracted new customers, particularly overseas clients.

The KTP also improved LCG’s competitiveness, reduced their vulnerability to turbulent market conditions, increased their market share and the proportion of their business outside the UK. Prior to the KTP, LCG staff only had the capacity to verify five per cent of clients' trades based on manual analysis; the KTP has increased this capacity to 100 per cent

 

Ricky Walia, Head of Risk at London Capital Group, said "The KTP has given us the ability to significantly improve our assessment of the risk posed by clients. This will enable us to be more resilient to the market conditions and to drive down our prices (spreads), thus enabling us to capture a far greater share of the international market."

To view the ESRC article, please click here.

 

 

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