Composable component-oriented derivative contracts

A financial engineer's day-to-day business is shaped by permanently shortening product life and time to market cycles of the products being developed. Representing an already very important and higher-than-average growing segment of local and world-wide markets, the design and valuation of derivative contracts has to be optimised to guarantee and improve a market player's position. The inherent flexibility of derivatives results in a situation already well-known to software developers: increasing complexity and variability create the need for simple yet efficient and scalable methodologies for contract composition, processing, management and valuation. Active Documents, a component-oriented approach, provide solutions by transferring the principle of thinking in components to this domain. This paper discusses Active Documents in context of derivatives and sketches possible benefits in comparison to state of the practice techniques. Moreover, new scenarios making use of the added value of Active Document systems are illustrated.