ORLANDO, Fla., April 20 /PRNewswire/ -- The application of operations research and analytics to speedily processing complex securities transactions allowed Mexico's Indeval to win the 2010 Franz Edelman Award for Achievement in Operations Research and the Management Sciences at a banquet sponsored by the Institute for Operations Research and the Management Sciences (INFORMS) in Orlando last night.
The Franz Edelman competition attests to the contributions of operations research in the profit and non-profit sectors. Since its inception 39 years ago, cumulative dollar benefits from Edelman finalist projects has reached over $160 billion.
Indeval, the Mexican Central Securities Depository for all financial securities, manages Dali, the Securities Settlement System (SSS) that now has as its core an operations research engine.
Dali settles securities operations that average over $250 billion daily, more than 70% of the value settled in the Mexican payments system. Thus, an amount close to the Mexican gross domestic product (GDP) is settled in five operating days.
In 2005, Indeval, the Mexican Central Bank, and Instituto Technologico Autonomo de Mexico (ITAM) began implementing Dali, a safer, more reliable, and more efficient SSS. The two key requirements for the new system were:
- having an SSS that can function with minimal resources, which is invaluable during financial crises when liquidity is scarce; and
- real time settlement to meet ever-increasing demands for intraday liquidity and for better risk management tools.
The core of Dali is an operations research-based engine that is executed automatically and offers a continuous and secure operation, ensuring that settlement is irreversible. This single clearing and settlement engine incorporates a linear programming model that chooses which pending operations can be settled with the depositors' available balances, maximizing the value of the transactions settled.
Thanks to the model, many transactions that would remain pending if they were processed individually are settled together, thus reducing liquidity requirements dramatically - by 52% in cash and 26% in securities. The most important benefit of the implementation of O.R. in Indeval's SSS is the enhancement and strengthening of the Mexican financial infrastructure.
The six finalists competing in the 2010 Franz Edelman Award Competition included the Delaware River Basin Commission, Deutsche Post DHL, the New Brunswick Department of Transportation, Procter & Gamble, and Sasol, the South African chemical and energy company. More information about all the competitors is in the News Room at www.informs.org.
Every year, the Franz Edelman competition recognizes outstanding examples of operations research (O.R.)-based projects that have transformed companies, entire industries, and people's lives. O.R. uses advanced analytical methods to help make better decisions.
Past Franz Edelman winners include HP, Memorial Sloan Kettering Cancer Center, Merrill Lynch, Motorola, and IBM. Additional information about the Edelman Competition is online at http://www.scienceofbetter.org/Edelman.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.
SOURCE INFORMS
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