Mizuho to switch to cloud-based market risk management system

Maria Nikolova

Cloud services are set to enable Mizuho to procure the system resources necessary for large-scale calculations in a timely and appropriate manner.

Tightening global financial regulations have prompted Japanese financial services giant Mizuho Financial Group, Inc. (TYO:8411) to consider adopting a new system for market risk management. As per an announcement published earlier today, Mizuho Financial Group and Mizuho Bank aim to develop a market risk management system using a cloud computing environment provided by Amazon Web Services (AWS).

Mizuho notes that the Basel Committee released its most recent consultative document in March 2018 and is working to finalize revisions to the FRTB (Fundamental Review of the Trading Book) – financial regulations triggered by the global financial crisis. When calculating market risk values under the FRTB, more advanced, complex, and extensive calculations are required than previously. The new regulations also require more accurate risk measures based on product type and risk category.

Given this, Mizuho says, the global financial institutions are faced with the necessity to enhance their market risk management systems. In order to comply with FRTB implementation requirements by 2022, Mizuho is planning to develop a market risk management system that will incorporate calculation logic capable of supporting sophisticated risk management. The system will utilize AWS’s cloud services.

The rationale for such a transition includes the ability to utilize a computing environment where servers can be procured flexibly depending on the number of calculations. Cloud services are also set to enable Mizuho to procure the system resources necessary for large-scale calculations in a timely and appropriate manner as well as reduce future costs by avoiding extensive infrastructure investment. The bank will also be capable of responding flexibly to future tightening of regulations and transaction volume fluctuations by securing flexibility in procuring servers.

Mizuho has been a keen adopter of new technologies. In March this year, Mizuho Financial Group announced a partnership with IBM Research – Tokyo, with the companies working together on a new Market Forecasting Tool. The tool uses advanced AI technologies developed by IBM Research – Tokyo, including a unique artificial neural network technology called dynamic Boltzmann machine (DyBM). The Market Forecasting Tool seeks to offer a one-of-a-kind approach to predict financial markets trends.

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