Luxembourg start-up, TheMarketsTrust was chosen and accepted into the first phase of the SME Horizon 2020 EU programme, with its project of developing new generation tools to valuate the risk of complex financial instruments, known as “Contingent Convertible Bonds” (co-co bonds).
After the 2007-2008 financial crisis, European banks issued new types of hybrid financial instruments to match regulatory capital requirements. Co-co bonds, are bonds converted into shares if the issuer’s capital falls below set thresholds. Due to their contractual complexity and systemic risks in the banking system, valuating them is extremely difficult.
By partnering with Professor Wim Schoutens of Leuven University (KUL), a pioneer in the modelling of co-co bonds, TheMarketsTrust will develop the tools, using their self-developed real-time risk analysis platform, Leopard Workstation as the technological basis.
In the long term, TheMarketsTrust will integrate other types of complex financial instruments into the Leopard Workstation platform, offering investors a real-time risk monitoring of their portfolio. In achieving this, the start-up aims to become a European alternative to existing rating agencies, which investors currently rely on.
Photo by TheMarketsTrust
