What are BICs?

BICs stands for Basis Instruments Contracts

BICs are derivatives contracts of reference through which any derivatives contract, however complex or illiquid can be decomposed.

With BICs, one does the decomposition of derivatives contracts in a multi-period market, yet in the end, one can replicate the payoff of any derivatives contract under consideration statically .

BICs are independent of model assumptions. This means the decompositions obtained are independent of the process driving the underlyings as well as the microstructural wrinkles of markets under consideration.

The BICs analysis leverages a redefinition of derivatives that encompasses all previous definitions in financial, economic and mathematical analysis and extends it to other fields of engineering. Yet, the definition has the very desirable property of being computationally reducible to a tractable data type and can be used in a wide variety of decision sciences.