S&P Capital IQ said it acquired R2 Financial Technologies, a Toronto-based developer of risk and scenario analysis software.

The terms of the deal were not disclosed. R2 Financial Technologies, privately held before the acquisition, was founded in 2006 and has about 30 staffers, including quantitative analysts and engineers.

S&P Capital IQ is an investment data and research arm of The McGraw Hill Companies. Capital IQ provides web-based corporate data and research services that allow financial executives to analyze company fundamentals and build financial models. It has more than 4,200 clients, including investment banks, investment management and private equity firms.

R2’s software products help traders, as well as portfolio and risk managers, price complex securities and analyze risk. Its NxR2 system analyzes risk investment scenarios in complex portfolios. The system also helps traders and managers price the portfolios.

Meanwhile, the firm’s R2 Capital system measures a portfolio’s counterparty credit risk and calculates credit valuation adjustments. This technology is based on the work of R2 founder Dr. Dan Rosen, a Fellow of the Fields Institute, where R2 was incubated from 2006 to 2009.

With R2’s risk capabilities integrated into Capital IQ platforms, the company plans to reach out to a larger user base, including asset managers, hedge funds, banks, investment banks, and regulators.

“We will now be able to offer clients an integrated view of market and credit risks across asset classes in a unique situation, which is increasingly important for financial institutions that are looking to manage complex and diverse portfolios across the globe,” said Lou Eccleston, president of S&P Capital IQ.

R2 Financial’s clients include Bank of America Merrill Lynch, Comisión Nacional Bancaria y de Valores, Infonavit (Mexico’s Housing Fund), Sociedad Hipotecaria Federal, Banque Nationale du Canada and Carlson Capital.

Going forward, the R2 team will be integrated within Capital IQ’s newly-created portfolio risk management group, which is focusing on expanding the functionality of such analytical tools as cross-asset-class portfolio construction and valuation.

Tommy Fernandez writes for Money Management Executive.


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