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
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
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.