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Austin DBusiness

Merrill Lynch returns for more
10/13/99 6:45:00 AM

By Marla Dial, dbusiness.com

AUSTIN, Texas, Oct. 13 (dbusiness.com) - For the second time this year, Merrill Lynch is turning to an Austin software startup for help with complex derivative securities pricing projects.

SciComp Inc., a 5-year-old company that hit the market last year with its first product, said Merrill Lynch has purchased an undisclosed number of additional licenses for its SciFinance product. The financial services firm originally bought the software package in January.

Executives declined to say how much the repeat business is worth, but confirmed that SciFinance generally sells for about $100,000 per user per year. The software will be used by workers in Merrill Lynch's Global Equity-Linked Products group.

"We're real pleased" with the deal, SciComp President Elaine Kant told dbusiness.com. "It shows that when you use it, you want to use it more, and it's useful to a variety of people in your organization."

SciFinance is designed to help quantitative analysts and financial engineers come up with complex pricing models for derivatives - investments that are based on the value of underlying securities. The product has been purchased in the past by MeesPierson, a large Dutch bank, as well as Bear, Stearns Securities Corp.

Kant said the software currently is being evaluated by "a number of additional major banks," but it's hard to say when the next customer deal will be announced.

SciFinance helps banks produce their own mathematical software, without any programming. Rather than having bank employees spend hours writing code to help price derivatives, a worker can use about a half-page of text to describe a particular problem. SciFinance automatically generates code and comes up with a model for solving the problem.

Executives say the software can do the work about 10 times faster than bank employees.

SciComp is a privately held company that employs about 10 people. To date, is has received a single funding round - $1.5 million from New Jersey-based Verticality Investment Group - but Kant said executives are considering another round to help expand the company.

Marla Dial covers the Austin region for dbusiness.com. E-mail her with story ideas or comments.